De­tails emerge on planned deal by Dig­nity, Tenet, As­cen­sion

Modern Healthcare - - REGIONAL NEWS - —Melanie Evans

Dig­nity Health would invest $30 mil­lion in cash and take a mi­nor­ity stake in a pro­posed Ari­zona joint ven­ture with Tenet Health­care Corp. and As­cen­sion Health, ac­cord­ing to a bond of­fer­ing by Dig­nity.

The deal, un­veiled in July, has not yet closed. Dal­las-based Tenet will hold 60% own­er­ship in the ven­ture, which would op­er­ate Caron­delet Health Net­work, Tuc­son, Ariz., a poorly per­form­ing sub­sidiary of As­cen­sion Health, St. Louis.

Dig­nity Health, San Francisco, and As­cen­sion would each hold 20% owner- ship, ac­cord­ing to the bond fil­ing, re­veal­ing for the first time pub­licly what the own­er­ship split will be.

The deal will bring to­gether three gi­ant health sys­tems with dis­tinctly dif­fer­ent own­er­ship mod­els but a sim­i­lar pen­chant for the type of re­cent deal­mak­ing that has united un­likely part­ners and fur­ther con­sol­i­dated the in­dus­try.

Caron­delet Health Net­work in­cludes three hos­pi­tals, two med­i­cal groups and other as­sets. Moody’s In­vestors Ser­vice in June de­scribed the re­gional sys­tem as un­der­per­form­ing with a neg­a­tive op­er­at­ing cash flow. An­a­lysts have looked fa­vor­ably on the pro­posed deal, which was one among sev­eral by As­cen­sion that “demon­strates an abil­ity and will­ing­ness to ac­tively man­age the sys­tem’s port­fo­lio of hos­pi­tals,” Moody’s said in an As­cen­sion rat­ings re­port.

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