Five Alabama hospitals to be sold in $910M deal

Tenet Healthcare Corp. continues to divest more of its hospitals, and Orlando Health is expanding its footprint in the southeast.

Tenet Healthcare Corp. said it has reached an agreement to sell five hospitals in Alabama to Orlando Health in a $910 million deal.

The for-profit health system said Monday it has reached an agreement to sell five hospitals in Alabama to Orlando Health in a $910 million transaction. Tenet is selling its 70% majority ownership interest in Brookwood Baptist Health in Birmingham, Alabama.

The deal includes the hospitals and a host of other physician practices and healthcare locations. Tenet said Brookwood Baptist Health will remain a joint venture with Baptist Health System.

Tenet said the deal should be concluded in the fall of 2024, assuming regulators approve the transaction.

A private, nonprofit system, Orlando Health says it will manage day-to-day operations of Brookwood Baptist Health in partnership with Baptist Health System. Brookwood will remain a faith-based organization, Orlando Health said.

David Strong, president and CEO of Orlando Health, noted that focus on faith in the partnership.

“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,” Strong said in a statement. “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.”

Amy Allen, president and CEO of Baptist Health System, issued a statement endorsing Orlando Health’s management.

“They have a proven track record in delivering high-quality healthcare services and are well positioned to invest in our community,” Allen said in the statement. “We are excited to welcome them to Birmingham and to jointly support the faith-based mission of Brookwood Baptist Health.”

Orlando Health, based in central Florida, expands its presence into central Alabama with the deal. Orlando operates 17 hospitals and 10 freestanding emergency departments, along with nine hospital-at-home programs. The system says it has four other hospitals and six other emergency departments in development.

Orlando is acquiring these five hospitals: Brookwood Baptist Medical Center; Princeton Baptist Medical Center; Walker Baptist Medical Center; Shelby Baptist Medical Center; and Citizens Baptist Medical Center. The deal also includes associated physician practices and other healthcare locations.

Thibaut van Marcke, the senior vice president of Orlando Health’s Southeast Region and president of Orlando Health Dr. P. Phillips Hospital, will lead Orlando Health’s efforts in Alabama, the system said.

Tenet, based in Dallas, Texas, said its after-tax proceeds of the sale would be about $790 million. Under the deal, Conifer Health Solutions, a Tenet subsidiary, will secure a 10-year contract to provide revenue cycle management services for the Birmingham hospitals and associated care sites.

Saum Sutaria, MD, chairman and CEO of Tenet Healthcare, said Orlando Health is “an esteemed, high-performing healthcare organization with an over century-long commitment to improving the health and wellness of the communities they serve.”

“Integration of these hospitals into their network will advance healthcare for the greater Birmingham communities,” Sutaria said in a statement.

Saum Sutaria, MD, chairman and CEO of Tenet Healthcare, said Orlando Health is “an esteemed, high-performing healthcare organization with an over century-long commitment to improving the health and wellness of the communities they serve.”

“Integration of these hospitals into their network will advance healthcare for the greater Birmingham communities,” Sutaria said in a statement.

Tenet has been selling a number of its hospitals in recent months. In March, the company completed the sale of four of its California hospitals to UCI Health, the clinical enterprise of the University of California, Irvine, in a $975 million deal.

Also this spring, Tenet finalized the sale of two other hospitals on California’s central coast to Adventist Health in a $550 million deal.

Tenet has been selling hospitals and using the proceeds to pay down debt, Fitch Ratings noted in March. The company has used revenue from sales to pay down $2 billion in debt, and Tenet has seen growing revenue from its ambulatory segment, Fitch said.

Orlando Health’s entry into the Alabama market comes just weeks after another big deal in the state. In late June, the University of Alabama Health System said it is planning to purchase Ascension St. Vincent’s five hospitals and other healthcare sites in a $450 million deal.

• Read more: Why hospital merger activity could rise in the second half of 2024