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Joint Venture Closes Between Tenet And Baylor Scott & White Hospitals

The joint venture announced early last year between Baylor Scott & White Health and the Tenet Healthcare Corp. has closed, linking together five hospitals in eastern and northern Dallas County.

The joint venture announced early last year between Baylor Scott & White Health and the Tenet Healthcare Corp. has closed, linking together five hospitals in eastern and northern Dallas County.

Baylor Scott & White will retain a majority stake in the five hospitals, four of which were owned by Tenet: Centennial Medical Center in Frisco; Doctors Hospital at White Rock Lake; Lake Pointe Medical Center in Rowlett; and Texas Regional Medical Center at Sunnyvale. The deal also includes Baylor Medical Center at Garland. It closed on December 31 and became effective the next day.

“We have in the Dallas market four very high quality community hospitals that provide excellent care to the community we serve. But we realized healthcare is going through tremendous changes and we will be held accountable for how we can manage the health of a population,” said Brett Lee, Tenet’s CEO for the Dallas region.“With four mid-sized community hospitals, we weren’t equipped to do that on our own.”

Those four hospitals will become access points to the 430,000 covered lives under Baylor’s accountable care organization, the Baylor Scott & White Quality Alliance. One of the Dallas-based nonprofit’s largest gaps in the region was in the county’s eastern and northern reaches where the four Tenet facilities are located. A joint venture didn’t require the capital or resources of an outright acquisition and allows Tenet to pair with a respected nonprofit provider to reach more patients in a coordinated setting, Lee said. Meanwhile, Baylor Scott & White CEO Joel Allison said the venture allows its growing physician group, the Health Texas Provider Network, have even more options to send patients.

“We’ve had significant amounts of providers join the Health Texas Provider Network and they had already joined our Quality Alliance so we picked up probably another 50 primary care physicians in this new joint venture,” Allison said. “It helps us to provide increased access to our patients who need care and to get it conveniently.”

Personnel wise, nothing much will change at those facilities. The hospitals will transition to Baylor Scott & White branding sometime around the spring of this year. The same leadership teams will remain in place, as will the hospital’s governing boards. But each facility will have an additional, new joint governing board made up of half Baylor Scott & White and half Tenet personnel to ensure that the hospitals are adhering to a uniform set of guidelines.

For instance, the deal requires Tenet to adopt Baylor Scott White’s charity care and community service policies, which are set by the state. The hospitals will all provide at least 4 percent of their care to charity cases and 1 percent to community service; Baylor hospitals must meet that requirement to retain its tax-free status. Lee said that “doesn’t significantly change” the operations at the Tenet hospitals.

In fact, Tenet last year entered into similar deals last year with nonprofit systems in Arizona and Alabama. The difference being that Tenet acquired majority interests in both the Carondolet Health Network in Tucson and the Baptist Health System in Birmingham.

“The landscape in this market is saturated enough,” Tenet CEO Trevor Fetter said last year of the Dallas area. “There isn’t much opportunity for any particular player to say, ‘let’s build a new hospital.’ They’ve all been built. Or ‘let’s acquire a hospital;’ they tend to be consolidated into large systems. So with that kind of market dynamic, it made a lot of sense for us to think about who we might want to partner with.”