Tenet Healthcare's joint venture with United Surgical Partners International will create the U.S.' largest provider of ambulatory surgery centers. Fred Katayama reports.
More consolidation in the medical arena. Tenet Healthcare is forming a joint venture with United Surgical Partners International. Together, they'll become the U.S.' largest provider of ambulatory surgery with 244 centers. Plus, they'll run short-stay surgical hospitals and imaging centers in 29 states. Tenet will pay $425 million to private equity firm Welsh, Carson and other USPI shareholders. And it'll take on $1.5 billion of USPI's debt. It's also buying Welsh, Carson's British surgery center operator, Aspen Healthcare for $215 million. The deal gives Tenet the option of buying USPI over the next five years. Outpatient surgery centers have grown fast because they're more efficient than hospitals, saving patients time and money. And the government saves money because Medicare pays them less for procedures that it does for hospitals. But that growth has recently matured. Deutsche Bank analyst Darren Lehrich said, "USPI's health system partnerships could give Tenet Healthcare an opportunity to strengthen its market presence in a number of key markets where Tenet is not a top-tier player by bolstering its market position with USPI joint ventures." Tenet's shares shot up on the news, erasing this year's loss. Tenet's move is the latest in a string of deals in the hospital sector since the passage of the Affordable Care Act. Over the last two years, Community Health Systems has bought Health Management Associates, and Tenet acquired Vanguard Health Systems.