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March 12, 2021 02:56 PM

Trinity Health buys majority stake in privately held urgent-care provider

Tara Bannow
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    Modern Healthcare Illustration / Getty Images

    One of the country's largest not-for-profit health systems, Trinity Health, is banking on future demand for urgent care by acquiring a majority stake in a privately held Louisiana company that runs such facilities.

    Livonia, Mich.-based Trinity, which has more than 90 hospitals and drew almost $19 billion in annual revenue in fiscal 2020, says it plans to use its new position in Baton Rouge, La.-based Premier Health to expand patient access to convenient care, both in its own communities and beyond.

    "We're bullish about urgent care because we saw even through the pandemic, their volumes came racing back," said Mike Englehart, Trinity's senior vice president of medical groups and ambulatory strategy. "People used them, rather efficiently, to do COVID testing. And the scores they receive from patients are top decile."

    Providers have invested heavily in more urgent care and other types of ambulatory facilities in recent years as patients clamor for cheaper, more convenient options. The pandemic lit a fire under that trend as patients avoided hospitals out of fear of contracting the coronavirus. Urgent-care centers have played a significant role in COVID-19 testing. Publicly traded Tenet Healthcare Corp. said it saw "very strong growth" in urgent-care visits in the quarter ended Sept. 30 , 2020. Despite that, Tenet plans to sell most of its urgent-care centers.

    The parties declined to share the transaction price and Trinity's percentage stake in Premier, although Englehart said it's closer to 51% than 100%. Trinity now holds the majority of Premier's board seats.

    The transaction brings Premier's urgent-care center count to 73 locations in nine states, said Steve Sellars, the company's CEO. The deal will eventually fold most of Trinity's urgent-care centers into the company. All told, Englehart said more than 50 of Trinity's facilities will join Premier, keeping Trinity's branding.

    Premier has big growth plans. Sellars said he expects to double the company's footprint in three to five years, expanding its reach to 20 states including Florida, California and states in the Midwest and Southeast. Where that happens will depend mostly on finding the right partners, said Sellars, who declined to share the company's revenue.

    Premier's model is to strike joint venture partnerships with health systems around the country under which it operates urgent-care clinics in the systems' service areas under their names. In Trinity's case, it will operate facilities within Trinity's service areas while also allowing Trinity to benefit from its growth in others.

    Englehart said Trinity doesn't plan to become involved with managing the clinics, either those in its own service area or beyond.

    "They are the management company and they know how to run the urgent cares," he said.

    Trinity also doesn't plan to lay off any of Premier's approximately 1,300 employees, more than 300 of whom are physicians, physician assistants and nurse practitioners.

    Another draw with urgent care is it provides a pipeline to primary care. Englehart said more than 40% of Premier's patients don't have primary-care providers.

    "We know there's a bunch of consumers that are not yet tied to primary care, and this could be a wonderful entryway into our system or into any system that Premier partners with," Englehart said.

    Not only that, Sellars said Premier's urgent-care centers can refer patients to partners' specialty providers and other service lines.

    "We feel like urgent care is a pathway to the entire health system continuum of services," he said.

    Trinity has fared well financially during the pandemic, posting 72% higher operating income year-over-year in the back half of the year even excluding its federal stimulus grants. With the grants, Trinity's operating margin was almost 7% in that period. The system said volume declines were partially offset by payment rate increases and higher-acuity patients.

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