Tenet Healthcare has cut a deal with Novant Health to sell off three South Carolina hospitals and their related operations for roughly $2.4 billion, the systems announced Friday morning.
The all-cash deal will leave Tenet with after-tax proceeds of about $1.75 billion, funds which Tenet said it anticipates using “primarily for debt retirement.” The organizations are aiming for a first quarter of 2024 close, pending regulatory approvals, clearances and closing conditions.
“Our three hospitals on the coast in South Carolina are well regarded by the communities they serve for the high-quality specialty services they deliver,” Saum Sutaria, M.D., chairman and CEO of Tenet Healthcare, said in a release. “Novant is an innovative healthcare organization with a deep commitment to patient-centric care. Integration of these three hospitals into their network will bring benefits for generations to come.”
The three hospitals included in the sale are Coastal Carolina Hospital, in Jasper County; Hilton Head Hospital, in Beaufort County; and East Cooper Medical Center, in Charleston County.
While affiliated physician practices and other hospital operations will be making the switch to Novant, ambulatory facilities in those markets operated by Tenet subsidiary United Surgical Partners International will be staying put, the organizations said.
Still, the two organizations' interests in those markets will remain intertwined. The purchase agreement includes a “new and expanded” 15-year contract in which Tenet’s Conifer Health Solutions subsidiary will provide revenue cycle management services to the transacted facilities.
Additionally, “Novant Health and USPI will be enhancing their ambulatory surgery partnership to increase access to high-quality, ambulatory surgical services for communities across the Carolinas,” according to the announcement.
"As a health system rooted in the Carolinas, we are committed to expanding the communities we serve across our regional delivery network known for safe, quality, patient-centered care in South Carolina,” Novant Health President and CEO Carl Armato said in a release. “Across the region—from Wilmington to Conway and Myrtle Beach, and now Charleston, Hilton Head and Hardeeville—Novant Health is uniquely positioned to provide compassionate, expert, affordable, and personalized care that is easy to access and understand. This investment is the next phase of a long-term vision to improve the health and wellness of communities across South Carolina."
Novant said in its announcement of the transaction that it “will work with team members, medical staff and other stakeholders to continue delivering quality care close to home” upon the deal’s completion.
The Winston-Salem, North Carolina, nonprofit is an integrated system with 16 medical centers and more than 800 locations spread across its home state and South Carolina. Its operations in the latter include a partnership with Conway Medical Center and imaging care services delivered through its MedQuest Associates.
Novant reported almost $7.6 billion in revenue across 2022 with an operating income of about $68.2 million and more than $1.5 billion in provided community benefit. Earlier this year, it inked a deal with Community Health Systems to purchase two North Carolina hospitals for $320 million.
Dallas-based Tenet Healthcare is a for-profit with 61 acute and specialty hospitals as well as the country’s largest ambulatory platform in USPI. It claimed $19.2 billion in net operating revenues across 2022 and recently disclosed a $101 net operating income for its third fiscal quarter of 2023.