Dallas-based Tenet Healthcare Corp. has completed its merger with Nashville-based Vanguard Health Systems, officials announced Tuesday.
Tenet paid $1.8 billion in cash, or $21 per share of Vanguard stock, and agreed to assume $2.5 billion of Vanguard’s debt. Tenet will retain its headquarters in Dallas and maintain a significant operations office in Nashville. The company now operates 77 acute care hospitals, 173 outpatient centers, five health plans and six accountable care organizations.
Vanguard’s market reach was what initially drew Tenet’s eyes, CEO Trevor Fetter said in an interview Tuesday. In addition to locations in Chicago, Phoenix, Detroit, and Boston, Vanguard’s Texas market was especially appealing.
“Vanguard is absolutely tops in San Antonio,” Fetter said. “They have a really great, well-established brand there, Baptist Health. In addition they had made a move into South Texas, in Harlingen and Brownsville.”
Fetter added that others questioned his interest in the Texas market, with its highest-in-the-nation uninsured rate, and Governor Rick Perry’s penchant for squashing Medicaid changes. Tenet, though, saw an opportunity.
“We believe that eventually in Texas Medicaid will be expanded and that Texans will eagerly embrace the consumer-friendly reforms,” he said.
With the acquisition, Tenet becomes the second-largest for-profit hospital chain in terms of revenue and the third-largest in number of hospitals owned. Tenet is now one of the top-70 largest employers in the United States. And it may not stop there.
“We will be very active going forward,” Fetter said. “Opportunities to expand will become more abundant, and we’ve positioned ourselves well.”
On Tuesday afternoon, Tenet Healthcare’s stock was up one percent. Vanguard officials made no public statement on the acquisition.