Tenet completes exit of Chicago market with 3-hospital sale
- Tenet Healthcare sales continue as the Dallas-based health system sheds the last of its Chicago-area hospitals.
- The for-profit system has inked a definitive agreement with Pipeline Health and TWG Partners, a Chicago-based healthcare investment firm, for the sale of Louis A. Weiss Memorial Hospital, Westlake Hospital and West Suburban Medical Center, along with affiliated facilities.
- The deal is expected to close in the fourth quarter of this year, subject to regulatory approvals. Pipeline will manage the hospitals following completion.
Tenet appears to be sloughing off its debt. As of March 31, the chain’s long-term debt totaled $14.2 billion, down from $14.8 billion at the end of last year.
With the Chicago sales, the company will have trimmed the number of hospitals it owns to 66, a net loss of 10 hospitals since the end of first quarter 2017.
For the first quarter of 2018, the chain reported hospital patient revenue of $3.6 billion, up 6.7% from the same period the prior year. The previous sales did shed some debt, but also contributed to a 4.1% decline — to $3.9 billion — in net operating revenue in its hospital business.
Tenet first signaled its intention to exit the Chicago market in mid-October with a definitive agreement to sell MacNeal Hospital and related operations to Loyola Medicine. At the time, the health system revealed it was talking with potential buyers for its other three Chicago-area hospitals.
The sales are part of a larger restructuring effort that has included cuts to Tenet’s regional management layer, as the hospital operator seeks to improve its finances in the wake of declining inpatient volumes. In addition, long-time CEO Trevor Fetter announced he would step down, then left much sooner than expected. Executive Chairman Ronald Rittenmeyer is serving as CEO while the company looks for a permanent successor.
Tenet’s sale reflects the wider selling trend going on elsewhere in healthcare as organizations adapt to lower admissions and tighter reimbursement.
Last month, Virtua Health signed an agreement to purchase Lourdes Health System, a Trinity Health operation with two hospitals and two physician practices in New Jersey.
Also in June, Sanford Health and Good Samaritan Society agreed to merge in a move combining two of Sioux Falls, South Dakota’s largest employers. The deal, which is expected to close by Jan. 1, would fold Good Samaritan’s senior care services into Sanford’s network of 44 hospitals across nine states.