Dive Brief:
- WellStar Health System recently purchased five acute care hospitals from Tenet Health and merged with nonprofit West Georgia Health -- making it the largest nonprofit healthcare provider in Georgia.
- The deal required a $600 million bridge loan from Bank of America and an $80 million capital lease, resulting in a drop to the company's credit ratings to A2 by Moody's Investor Services.
- The credit rating changes were expected by the company, and according to The Bond Buyer, the A2 designation indicates WellStar's strong position in Atlanta with a growing market share.
Dive Insight:
Jim Budzinski, WellStar's CFO, said in a statement to The Bond Buyer, "Our acquisition of Tenet's five metro Atlanta hospitals as well as the merger of West Georgia Health System into WellStar are positive steps for the system, our current patients and the patients of the new communities we will serve."
WellStar's expanded system now includes 11 hospitals in the metro-Atlanta area with projected revenues of $3 billion and 113,000 admissions. It will own an estimated 21% of the market, making it the largest provider in that area.
The Tenant hospitals were acquired for $661 million, with a $575 million acquisition cost along with the assumption of $86 million of debt. WellStar plans to refinance the $600 million bridge loan and have additional debt for capital projects in the first half of FY 2017. S&P analysts said in a report that the company's expansion efforts "should position the organization to succeed as the health reform delivery model evolves," as reported by The Bond Buyer.
All the facilities will be operated as nonprofits and WellStar Medical Group will expand to more than 1,000 physicians across more than 200 medical offices and outpatient facilities, according to WellStar.