Dive Brief:
- Ardent Health Services and The University of Texas System formed a joint venture to acquire East Texas Medical Center Regional Healthcare System (ETMC).
- Under the agreement, announced Wednesday, Ardent will become majority owner and day-to-day manager of a new system combining ETMC’s nine hospitals and 39 clinics, Tyler-based UT Health Northeast hospital and 12 physician clinics and assorted facilities belonging to the UT system.
- ETMC began scouting for a strategic partner in February. Terms of the deal were not disclosed, but proceeds will be used to create a local foundation to promote health and wellness in east Texas, officials said.
Dive Insight:
Hospital M&A volume has been strong so far this year. Kaufman, Hall & Associates reported an 8% increase in activity in the first quarter of 2017, compared with a year ago, with 27 deals. Among them were three mergers involving nonprofits: Beth Israel Deaconess Medical Center and Lahey Health, UPMC and PinnacleHealth System, and Fairview Health Services and HealthEast Care System.
Ardent has been one of those players. In May, the Nashville-based for-profit hospital chain partnered with the University of Kansas Health System to purchase St. Francis Health, a 378-bed hospital located in Topeka.
Other recent deals include Baptist Healthcare System’s acquisition of Hardin Memorial Health in Kentucky and the merger of Northside Hospital and Gwinnett Health System in Georgia. The latter — creating a system with 1,479 beds, about 21,000 employees and 3,500 physicians — is expected to be fully integrated in 2019.
And this week The Wall Street Journal reported that Tenet Healthcare is exploring strategic options, including a possible sale. The health system is working with investment bankers and arranging meetings with potential buyers, the Journal said.
The industry has increasingly turned to consolidation. Organizations also see acquisitions as a means to enlarge their geographic footprint and to boost brand awareness.