For-profit hospital chain Tenet Healthcare Corp. has created a strategic alliance with Yale New Haven (Conn.) Health System in a bid to gain scale in the greater Northeast.
Under terms of the deal, Dallas-based Tenet and Yale New Haven would remain independent but would forge new partnerships together. Similar joint ventures have popped up in the past few years between large investor-owned companies and academic medical centers: LifePoint Hospitals in Brentwood, Tenn., and Duke University Health System in Durham, N.C., created Duke LifePoint Healthcare in 2011. Community Health Systems in Franklin, Tenn., and Cleveland Clinic built an alliance last year.
Officials said the core goals of the partnership will include enhanced care coordination in the region, clinical integration with local physician groups and the establishment of value-based contracts with payers and employers.
Tenet is in the process of acquiring four hospitals in the area: Eastern Connecticut Health Network, which includes 249-bed Manchester (Conn.) Memorial Hospital and 102-bed Rockville General Hospital in Vernon; Greater Waterbury (Conn.) Health Network, which includes Waterbury Hospital, a 357-bed teaching facility; and Bristol (Conn.) Hospital. Tenet is working to finish definitive agreements, and the potential deals still require approval from several Connecticut regulators. If approved, Yale New Haven would receive minority stakes in the hospitals.
Vanguard Health Systems originally drove the transactions, but they became part of Tenet's portfolio after the company acquired Vanguard last October for $1.8 billion in cash and the assumption of $2.5 billion of debt.
The new alliance could help Tenet and the three-hospital Yale New Haven finalize the pending transactions. In Connecticut, for-profit entities cannot become members of a medical foundation. However, if hospitals want to acquire hospitals and employ physicians, they may be able to create joint ventures with nonprofit partners, like the ones Tenet has proposed. Gov. Dannel Malloy has stymied legislation on the issue in the past, and many within Connecticut have opposed Tenet's entrance into the market.
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