Tenet Healthcare Continues to Sell Its Hospitals in Alabama in a Deal with Orlando Health

Texas-based Tenet Healthcare Corp. has announced that under a $910 million transaction, it has sold a 70% majority interest in its Brookwood Baptist Health in Birmingham, Alabama to Orlando Health.

Under the agreement, Orlando Health will gain access to five hospitals under Brookwood Baptist Health, including Walker Baptist Medical Center, Princeton Baptist Medical Center, Shelby Baptist Medical Center, Brookwood Baptist Medical Center, and Citizens Baptist Medical Center. All related operations and the 1,700 healthcare practitioners affiliated with Brookwood Baptist Health will also fall under the sale.

The five hospitals combined give Orlando Health access to over 70 primary and specialty care clinics and 1,700 beds. The Brookwood Baptist Health family extends to over 7,300 employees.

If regulatory agencies approve the deal, the transaction is expected to be finalized this fall. After taxes, Tenet is expected to receive $790 million in proceeds. Moreover, the agreement states that Tenet subsidiary, Conifer Health Solutions, will enter into a new agreement with Brookwood Baptist Health spanning the next decade, in which it will continue to provide revenue cycle management services to the business.

Even after the sale, Tenet has shared that it will remain in a joint venture with Baptist Health System. Orlando Health has announced that Brookwood will remain a faith-based organization even when the private, nonprofit system starts to manage the day-to-day operations. The operations in Alabama will be led by Orlando Health’s Southeast Region’s senior vice president, Thibaut van Marcke.

Emphasizing the aspect of faith in the partnership, David Strong, president and CEO of Orlando Health, said, “We are honored to further Brookwood Baptist Health’s mission of extending the healing ministry of Christ. There is a need and opportunity for a private, not-for-profit healthcare system in this market. We believe this is a new day in healthcare for our organizations and look forward to making Brookwood Baptist the best healthcare system in Alabama.”

This is the second big medical deal that has come into Alabama recently. Only a few weeks before this agreement, at the end of June, the University of Alabama Health System announced its intent to buy five of Ascension St. Vincent’s hospitals. The university plans not just to acquire the hospitals but other medical sites through the $450 million deal.

Orlando Health currently has nine hospital-at-home programs, 10 freestanding emergency departments, and 17 hospitals in its portfolio. Six emergency departments and four other hospitals are also well underway for the central Florida-based non-profit. The goal of this particular deal is to expand its presence in central Alabama.

In the recent past, Tenet has sold a number of its hospitals in California as well. First, in March, it sold four of its hospitals to the clinical enterprise of the University of California, Irvine, UCI Health, for $975 million. Later, in a $550 million deal, the company sold two more hospitals to Adventist Health on the central coast of California.

Fitch Ratings has observed that the growing revenue of Tenet can be attributed to its ambulatory segment, while the proceeds from these sales have been going towards reducing the company’s $2 billion debt.