Dive Brief:
- Tenet has regained full ownership of Conifer Health Solutions, acquiring the remaining stake in its revenue cycle management business from CommonSpirit Health.
- CommonSpirit will pay Tenet almost $1.9 billion over the next three years to get out of its existing services contract, according to the deal announced Monday. That’s offset by $540 million that Conifer will pay CommonSpirit for its almost 24% equity stake and to eliminate CommonSpirit’s capital account.
- All told, Tenet executives said the deal creates almost $2.7 billion in total value to the system through the cash payments, the reduction of liability on its balance sheet and the value of the additional Conifer equity. Tenet’s stock rose 2% in morning trade Monday following the news.
Dive Insight:
Conifer, which was founded in 2008, provides revenue cycle management and value-based care services to hospitals, physician groups, employers and other clients. The Tenet subsidiary is a major player in the billings space, processing roughly $25 billion in net patient revenue for more than 600 clients each year.
CommonSpirit has been a Conifer client since 2012. But the nonprofit system is washing its hands of the company as it moves to insource its own revenue cycle management functions.
Along with offloading its 23.8% minority stake in Conifer, CommonSpirit is exiting its services contract at the end of this year. That contract was previously set to run through 2032.
Tenet CEO Dr. Saum Sutaria called the transaction “mutually beneficial” in a statement, noting that Tenet — as Conifer’s sole owner — will have more flexibility to build the business.
Tenet plans to increase its investments in Conifer’s artificial intelligence and automation capabilities, Sutaria said on a Monday morning call discussing the deal.
That includes improving the reliability and speed of algorithms that process and sort millions of claims, and AI that can manage disputes over claims denials with insurers, according to the CEO.
Tenet regaining full ownership in Conifer represents the system going all-in on a business it was unsure about not too long ago.
In late 2017, Tenet began looking into a potential sale of Conifer, worried about low margins. The system pivoted to exploring a spinoff in the middle of 2019 due to lack of interest from acquirers, before eventually concluding in 2022 that Conifer should remain a subsidiary, citing its improving operations and earnings potential.
Conifer is one of a handful of non-hospital businesses maintained by Tenet, which has branched out in the past decade from a traditional hospital operator to a diversified healthcare delivery and services company.
Tenet operates 50 hospitals in eight states, along with upwards of 130 urgent care centers, off-campus emergency departments and other outpatient sites. Tenet also owns the largest ambulatory platform in the country, United Surgical Partners International, which controls 530 ambulatory surgery centers and more than two dozen surgical hospitals in 37 states. The company also operates a global business center in the Philippines.
Citing steady demand and volume growth, Tenet raised financial guidance twice in a row last year. In the fall, the Dallas-based company also upped its budget for capital spending, citing the need to grow further — especially in high-acuity service lines, which have been a driver of Tenet’s recent earnings.
Tenet also announced on Monday that it thinks adjusted earnings excluding interest, taxes and other non-operating factors will be at the upper end of its guidance range of between $4.47 billion and $4.57 billion this year.
Still, the system is staring down a potentially rocky 2026. Like many of its peers, Tenet is exposed to pressures from the loss of more generous subsidies for Affordable Care Act plans this year. More people formerly covered by exchange plans are expected to go uninsured due to steep premium hikes, which is expected to tamp down on volumes and increase uncompensated care for hospital operators.
During the third quarter, more than 8% of Tenet’s total hospital admissions and 7% of its total consolidated revenues came from ACA enrollees.
Tenet announces fourth quarter and full-year 2025 results on Feb. 11.
