Tenet Healthcare Acquires Texas RMC

Saying Tenet is "bullish on Texas," a senior executive describes the organization's majority interest stake in its fourth hospital in the Dallas market.

Tenet Healthcare Corporation has brought a fourth hospital into its Dallas market with the acquisition of a 55% interest in Texas Regional Medical Center at Sunnyvale, a 70-bed physician-owned community hospital 15 miles east of downtown Dallas.

Tim Adams, Tenet's Central Region CEO, says the hospital chain likes leans towards a majority stake in its joint ventures.

"We typically don't do a minority interest, though not to say we wouldn't," Adams says. "There are a lot of business reasons why we would want to be the majority partner. Without being a majority partner the partnership would not benefit from a lot of what Tenet could bring to that partnership."

And what does Tenet bring to the deal?

"One, it brings some scale to that hospitals and a few other facilities that are in that market. This is our fourth hospital in the Dallas market and the 18th hospital in the state of Texas," he says.

"We have two other facilities that are within 10−15 miles so it will be a nice scale of three facilities on the East Dallas corridor that enable us to take a step forward in our goal of building an integrated network in that East Dallas corridor, as well as strength in the hospitals current operating performance and clinical programs.

Tenet owns a controlling interest in three other hospitals in the Dallas area, including Lake Pointe Medical Center in Rowlett, Doctors Hospital of White Rock Lake in Dallas and Centennial Medical Center in Frisco.

In addition, Tenet operates 12 outpatient centers in the market with a population growth of 2.5% annually, which is nearly four times the national rate.

"We are bullish on Texas and the Dallas Metroplex area is a nice growing market, particularly the Sunnyvale area is growing at 4 times the national average and it's a great community," Adams says. "You have a high quality, very supportive medical staff and a highly engaged employee based so it has all of the right ingredients to have a very successful thriving hospital."

Texas Regional Medical Center opened in 2009 and clinical services include a cardiovascular center, spine program, obstetrics program and neonatal intensive care unit, surgical weight loss program and an emergency department. The 50 or so physician owners will maintain a 45% stake.

"They are a well-maintained and capitalized facility and there wasn't really any big capital investment that was needed early on," Adams says. "They've done a great job, as a stand-alone and they have been very successful in their first five years. With our partnership they'll be able to improve upon that success and take the organization to the next level."

Tenet operates 78 hospitals, 189 outpatient centers and Conifer Health Solutions consulting subsidiary.

Tenet and Florida Blue Create ACO
On another front, Tenet and Florida Blue, the Blue Cross and Blue Shield plan of Florida, have created an accountable care organization that covers nearly 10,000 Florida Blue commercial members in Dade, Broward, and Palm Beach counties.

The ACO took effect on June 1 and Florida Blue's members will have in-network access to Tenet's Florida-based ACO, the Advantage Health Network, which includes more than 900 physicians, as well as 10 acute care hospitals and 36 outpatient centers operated by Tenet Healthcare in South Florida.

This announcement follows similar arrangements between Tenet and Blue Shield of California, Independence Blue Cross and Blue Cross and Blue Shield of Texas. Not-for-profit Florida Blue has approximately four million healthcare members and serves 15.5 million people in 16 states through its affiliated companies.