Orlando Health has agreed to purchase Tenet Healthcare’s 70% majority ownership interest in Brookwood Baptist Health in Birmingham, Ala., for approximately $910 million in cash (after-tax proceeds of approximately $790 million).
Brookwood Baptist Health consists of five hospitals across Central Alabama with more than 1,700 beds, more than 70 primary and specialty care clinics, approximately 1,500 affiliated physicians and more than 7,300 employees. It was formed in 2015 following a merger agreement between Tenet and Baptist Health System.
Nonprofit Orlando Health is a 3,487-bed system that includes 17 hospitals, 10 free-standing emergency rooms and nine Hospital Care at Home programs. An additional four hospitals and six free-standing emergency rooms are in development. It will manage day-to-day operations of Brookwood Baptist Health in partnership with Baptist Health System. Baptist Health System will remain in the partnership and it will remain a faith-based organization.
“We are pleased to have Orlando Health join Brookwood Baptist Health as a majority and managing partner. They have a proven track record in delivering high-quality healthcare services and are well positioned to invest in our community. We are excited to welcome them to Birmingham and to jointly support the faith-based mission of Brookwood Baptist Health,” said Amy Allen, president and CEO of Baptist Health System, in a statement.
Thibaut van Marcke, who currently serves as senior vice president of Orlando Health Southeast Region and president of Orlando Health Dr. P. Phillips Hospital, will lead Orlando Health’s efforts in Alabama.
The transaction is expected to close in the fall of 2024, subject to regulatory approval. At closing, the name of the system will become Baptist Health.
Under the agreement, Dallas-based Tenet’s Conifer Health Solutions subsidiary will enter into a new and expanded 10-year contract to provide revenue cycle management services for the Birmingham hospitals and related operations.
In April 2024, Tenet announced the completion of the sale of its four Orange County and Los Angeles County hospitals and related operations to UCI Health. Tenet also completed the sale of its two San Luis Obispo hospitals and related operations to Adventist Health.
For the 12 months ended June 30, 2024, publicly traded Tenet (NYSE: THC) said its equity interest in the Brookwood Baptist Health joint venture generated pre-tax income of approximately $12 million and an Adjusted EBITDA less non-controlling interest of approximately $60 million, excluding interest expense of approximately $2 million and depreciation and amortization expense of approximately $46 million. The company estimates recording a pre-tax book gain of approximately $375 million as a result of this anticipated transaction.
