Hospital chain Tenet Healthcare Corp. will form a joint venture with closely held United Surgical Partners International Inc. to create the largest operator of outpatient surgery centers in the United States.
In the Philadelphia region, Tenet owns Hahnemann University Hospital, with an outpatient imaging facility nearby, in Center City; St. Christopher's Hospital for Children; and the St. Chris Pediatric Urgent Care facility in Jenkintown.
Tenet will contribute 44 freestanding surgery centers and 20 imaging locations, while USPI, owned by private-equity firm Welsh, Carson, Anderson & Stowe, will add 202 ambulatory surgery centers and 16 surgical hospitals, the companies said Monday in a statement.
The transaction helps Tenet gain a bigger foothold in outpatient surgery clinics, which can be more profitable than hospitals because they have lower overhead costs and focus on routine operations that can be managed efficiently, like joint replacements or oral surgery, said Tenet chief executive officer Trevor Fetter. Tenet has been on a buying spree of such centers over the last six years and plans to do more deals in the space, Fetter said.
"As consumers are increasingly being held responsible for the cost of their health care, they are looking at these ambulatory surgery centers and seeing they are lower-priced and very convenient," he said.
Dallas-based Tenet also agreed to buy a United Kingdom hospital operator, Aspen Healthcare Ltd., which was part of USPI until 2012, from Welsh Carson for about $215 million in cash. Aspen also focuses on short-stay surgery and caters to those in the U.K. with private insurance.
Tenet, the third-largest publicly traded hospital chain, will pay about $425 million in cash to Welsh Carson in exchange for 50.1 percent of the venture with the option to buy the remaining stake over five years.
Tenet had 210 outpatient facilities, including surgery centers and other types, at the end of last year, up from 183 in 2013.