$1.1B deal will give Tenet 45 SurgCenter ASCs

Dallas-based Tenet Healthcare will acquire up to 45 ASCs from Towson, Md.-based SurgCenter Development for $1.1 billion, Tenet announced Dec. 10.

Tenet's United Surgical Partners International subsidiary will operate the ASCs. The centers are in Arizona, Florida, Indiana, Louisiana, Maryland, Ohio, New Hampshire, Texas and Wisconsin and specialize in musculoskeletal procedures.

In addition to paying $1.1 billion in cash, Tenet assumed $18 million in center-level debt in exchange for a 60 percent stake in each center. Physician investors own the remaining stakes.

Tenet already has acquired most of the centers and plans to complete the rest of the acquisition by the end of this year. Some centers need regulatory approval.

After the deal, USPI will have the largest musculoskeletal surgery platform in the U.S. USPI's surgical platform now has 310 ambulatory surgical facilities, including 24 surgical hospitals in 33 states.

USPI and SurgCenter Development have a history. USPI acquired its first center from SurgCenter in 2005, said Brett Brodnax, USPI President and CEO.

"We have a tremendous amount of respect for (SurgCenter Development) as one of the leading developers of ambulatory surgical facilities in the country."

Concerning long term financial ramifications, Tenet projects the transaction will generate double-digit returns within three years of its completion and 42 percent of Tenet's adjusted-EBITDA will be generated by USPI's ambulatory business next year, up from 4 percent in 2014.

Tenet paid the $1.1 billion in cash and did not need to assume debt.

SurgCenter founder Gregory George, MD, PhD, said: "The history between the companies made this transaction a natural evolution for many of our current physician partners and their facilities, enabling them to leverage the breadth and depth of both USPI and Tenet."

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