WellStar Health System is set to buy five metro Atlanta hospitals from Dallas-based Tenet Healthcare in a deal announced by the two companies Tuesday.
Marietta-based WellStar, a nonprofit, says it will pay $575 million for the five hospitals owned by for-profit Tenet. The former will also assume another $86 million in debt for the lease of North Fulton Hospital, one of the five that’s part of the deal.
WellStar CEO Candice Saunders said more government regulations and changes to how hospitals get paid for services motivated the purchase.
“We have seen that the health care industry is changing at a rapid pace,” Saunders said. “Hospitals around the country are looking to expand their services.”
The move comes amid consolidations among major health insurances companies nationwide, including Aetna and Humana, announced in early July, and Cigna and Anthem, announced a few weeks later.
Christopher Press, a partner with Morgan Healthcare Consulting, said WellStar's move makes sense as insurers get bigger and gain leverage over hospitals.
“The hospitals, faced with [the changes in insurers], want scale of their own so that they can be in a better defense, whether that scale is size or geographic distribution or scope of services,” Press said.
WellStar announced it was in discussions with Tenant in July after backing out of a potential merger with Emory.
In addition to North Fulton Hospital, the deal also includes Atlanta Medical Center, its south campus, Spalding Regional Hospital in Griffin and Sylvan Grove Hospital in Jackson, along with all of the complimentary physician practices owned by Tenet.
WellStar says the acquisition would amount to an additional 1,192 hospital beds supported by 4,300 team members and a medical staff of 1,390 physicians and medical professionals. The deal would also boosts the WellStar network up to 11 hospital locations with more than 200 office locations.
The acquisition still needs approval from the state and Federal Trade Commission.