Tenet, As­cen­sion and Dig­nity part­ner up in Tuc­son

Modern Healthcare - - NEWS - By Beth Kutscher

Tuc­son, Ariz., is less than two hours south of Phoenix, but the cities have not over­lapped on health­care. That sep­a­ra­tion be­gan to dis­solve last month, how­ever, when Ban­ner Health, which owns 12 hos­pi­tals in greater Phoenix, signed a $1 bil­lion deal to buy the Univer­sity of Ari­zona Health Net­work, whose two hos­pi­tals are ma­jor play­ers in Tuc­son.

Last week, another deal was an­nounced that would link the two cities. As­cen­sion Health, head­quar­tered in St. Louis, said it plans to trans­fer part of its own­er­ship in Tuc­son-based Caron­delet Health Net­work into an un­usual three-way joint ven­ture that in­cludes Tenet Health­care Corp. and Dig­nity Health.

Caron­delet, which will re­tain its Catholic iden­tity un­der the deal, in­cludes 449-bed St. Joseph’s and 429bed St. Mary’s hos­pi­tals, both in Tuc­son, as well as 56-bed Holy Cross Hos­pi­tal in No­gales, the Caron­delet Med­i­cal Group, the Caron­delet Spe­cial­ist Group and an­cil­lary busi­nesses.

Tenet last year ac­quired five Phoenix-area hos­pi­tals as part of its takeover of Van­guard Health Sys­tems, based in Nashville. San Fran­cisco-based Dig­nity has three hos­pi­tals in the Phoenix re­gion.

Dal­las-based Tenet will hold the ma­jor­ity stake in Caron­delet, while As­cen­sion and Dig­nity will be mi­nor­ity part­ners. The par­ties are con­duct­ing due dili­gence but did not dis­close a time­line for mov­ing for­ward.

Across the coun­try, providers are or­ga­niz­ing into nar­row net­works that al­low them to bet­ter ne­go­ti­ate with in­sur­ers and form clin­i­cally in­te­grated or­ga­ni­za­tions.

Across the coun­try, providers are or­ga­niz­ing into nar­row net­works that al­low them to bet­ter ne­go­ti­ate with in­sur­ers and form clin­i­cally in­te­grated or­ga­ni­za­tions. It’s been hap­pen­ing rapidly in Phoenix, where Tenet and Dig­nity al­ready par­tic­i­pate in the Ari­zona Care Net­work ac­count­able care or­ga­ni­za­tion.

But Tuc­son had been be­hind the curve, said Bill Melville, se­nior an­a­lyst at Health Lead­ers-In­ter Study. “This deal is just as im­por­tant to Tenet and Dig­nity as it was to As­cen­sion,” Melville said. “With Ban­ner mak­ing a big move into Tuc­son, they al­most had to do this.”

Ari­zona has been a chal­leng­ing state for As­cen­sion. While the sys­tem did not break out rev­enue for Caron­delet in its most re­cent an­nual re­port, its uti­liza­tion sta­tis­tics showed a 7.5% de­cline in acute-care dis­charges be­tween 2012 and 2013 in Tuc­son and No­gales. In con­trast, ad­mis­sions in­creased 1.3% across As­cen­sion hos­pi­tals over­all.

With this deal, Tuc­son will re­tain its three ma­jor providers, with in­de­pen­dent TMC Health Care as the third player. But two of the par­ties will have stronger ties to the larger Phoenix mar­ket.

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