July 20, 2018
Dive
Brief:
- UnitedHealth
Group is among several entities weighing a bid for Tenet Healthcare’s
Conifer Health Solutions subsidiary, The Wall Street Journal reports, citing
people familiar with the matter.
- Tenet has
raised the possibility of selling its healthcare management business as it
continues to work to bring down debt, but has not said definitively that
it will do so. That could come out when the company releases its second
quarter earning report next month.
- With $1.6 billion in revenue last
year, Conifer accounted for about 8% of Tenet’s overall revenue for the
year. Analysts estimate a sale could bring in $2 billion or more,
according to the paper.
Dive
Insight:
Should
Conifer go on the block, UnitedHealth could be a strong contender. The
Minnetonka, Minnesota-based insurer has been actively building up its
Optum services arm through a succession of acquisitions. Administrative
costs are a big issue for providers and payers, so they are looking for ways to
rein them in. Conifer could help them do that.
UnitedHealth
established Optum in 2011 by combining the company’s existing pharmacy and care
delivery services. Since then, Optum has been on a purchasing spree to position
itself as leader in integrated services as companies compete in the changing
healthcare ecosystem.
In
December, Optum announced it was acquiring DaVita Medical Group for
about $4.9 billion. The deal, which is expected to close later this year, would
bring DaVita’s nearly 300 medical clinics and 1.7 million patients under
Optum’s OptumCare division.
The
company also bought the Advisory Board Company for
$2.58 billion, ambulatory surgery center chain Surgical Care Affiliates for
$2.3 billion and Massachusetts-based Reliant Medical Group.
UnitedHealth
recently revealed that Optum is part of $2.2 billion deal to
gain a controlling interest in Sound Inpatient Physician Holdings, a medical
staffing firm.
Tenet,
meanwhile, has been undergoing a major restructuring and divesting hospitals in
an effort to draw down debt.
Earlier
this week, the Dallas-based hospital chain announced a definitive agreement with
Pipeline Health and TWG Partners for the sale of three Chicago-area hospitals:
Louis A. Weiss Memorial Hospital, Westlake Hospital and West Suburban Medical
Center. The deals complete Tenet’s exit from the Chicago market, which began
with the sale of MacNeal Hospital to Loyal
Medicine in October.
The
hospital sales — a total of 10 with the latest three — are part of a broader restructuring effort initiated
last year that included slimming down Tenet’s regional management layer
and another round of layoffsannounced
in January.
There
are signs the moves are paying off. At the end of March, Tenet’s long-term debt was
$14.2 billion, down from $14.8 billion at the end of 2017.
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