Dallas-based Tenet Healthcare Corp. announced a joint venture with the Addison company United Surgical Partners International Inc. that will create the largest network of ambulatory surgical centers in the country.
Under the agreement, Tenet will own 50.1 percent of the venture while USPI takes the remaining 49.9 percent. In total, the new pairing creates a network of 244 ambulatory surgery centers, 16 short-stay surgical hospitals, and 20 imaging centers throughout 20 states. Of those, 44 ASCs were Tenet’s as well as all of the imaging centers. The rest came from USPI.
The combined operation brings partnerships with 50 health systems and more than 4,000 physicians. Tenet has shifted its focus to outpatient services, increasingly adding clinics and ambulatory surgery centers to its portfolio. In the last quarter of 2014—the company’s most successful in a decade—its outpatient volume grew at twice the rate of its inpatient. This is, by far, Tenet’s most aggressive move to bolster its outpatient offerings.
“It’s really the way healthcare is moving,” says Trevor Fetter, the CEO of Tenet. “So many procedures now can be done on an outpatient basis. The physicians prefer to practice in these more convenient, simpler environments.”
Tenet, the third largest healthcare company in the U.S., now leaps past its closest competitor HCA’s 113 freestanding ASCs. Prior to the pairing, Tenet had 210 outpatient facilities—including surgical centers and primary care or specialty clinics—which was up from 183 in 2013.
Tenet will pay about $425 million in cash to private equity firm Welsh Carson and USPI’s other investors, as well as another $215 million for purchase of Aspen Healthcare, a British network of nine private hospitals and clinics in the United Kingdom. Tenet will take on an expected $2.2 billion in debt, primarily to refinance the $1.5 billion in existing debt that USPI has. The transactions should close by the third quarter of 2015, the company says.
In five years, Tenet expects to fully own the new company. It does not, Fetter says, have anything to do with Welsh Carson purchasing the Addison outpatient clinic company Concentra from insurer Humana.
“It has no overlap with anything we do,” he said.