In a sign of a trend towards consolidation between for-profit operators and not-for-profit hospitals, Tenet Healthcare Corporation, Dignity Health and Ascension have signed an agreement to form a partnership to own and operate Carondelet Health Network in Tucson, Arizona.
Tenet, the nation's largest for-profit healthcare network, is the majority partner in the new venture. Dignity Health and Ascension will own minority interests in the partnership.
The deal is expected to close by the third quarter of 2015. Financial terms were not disclosed.
The Catholic healthcare system Ascension is the nation's largest not-for-profit hospital system, and formerly owned 100 percent of Carondelet, also a faith-based not-for-profit.
Carondelet will retain its identity but will become a for-profit company and will pays taxes, according to Tenet.
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The partnership moves Tenet into the Tucson market. It will connect Carondelet to the Arizona Care Network, an accountable care organization managed by Tenet and Dignity Health.
The number of partnerships between for-profit and not-for-profit health systems is expected to grow, according to Navigant Healthcare consultants.
The financial outlook for for-profit systems is "great to good," while the outlook for not-for-profit hospitals "is dismal" due to shrinking operating margins, mounting costs and declining reimbursements, according to the Navigant brief.
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"These changes will trigger further consolidation between not-for-profit and deals with for-profit operators," said authors Paul Keckley and Marina Karp. "For-profit acquisitions of not-for-profits by investor-owned systems will increase in the next five years, reducing the number of not-for-profit operators an average of 0.5 percent per year."
The facilities in the Tenet, Ascension and Dignity partnership will include St. Joseph's Hospital (486 beds) in Tucson, St. Mary's Hospital (400 beds) in Tucson, Holy Cross Hospital (25 beds) in Nogales, a heart and vascular institute and neurological center, the Carondelet Medical Group and Specialist Group, and imaging centers and other ambulatory services.
"Through this innovative partnership," said Britt T. Reynolds, Tenet's president of hospital operations, "we will not only continue Carondelet's 135-year healthcare mission to care for residents across Tucson and Southern Arizona, but will also connect Carondelet to a larger, growing statewide healthcare network, enhancing patient access to a wide range of healthcare resources throughout the state. This is consistent with Tenet's strategy to create new, innovative models for patient care."
Twitter: @SusanMorseHFN