Orlando Health buys Tenet’s stake in Brookwood Baptist Health

Orlando Health has agreed to acquire Tenet Healthcare’s 70% majority interest in Brookwood Baptist Health in Birmingham, Alabama, for approximately $910 million in cash (after-tax proceeds of approximately $790 million).

Brookwood Baptist Health consists of five hospitals in 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.

The nonprofit Orlando Health system has 3,487 beds and includes 17 hospitals, 10 freestanding emergency rooms and nine Hospital Care at Home programs. It has four more hospitals and six freestanding emergency rooms in the works. 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 remain a faith-based organization.

“We are pleased that Orlando Health has joined Brookwood Baptist Health as a majority and managing partner. They have a proven track record of delivering high-quality healthcare and are well-positioned to invest in our community. We are excited to welcome them to Birmingham and 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’s Southeast region and president of Orlando Health Dr. P. Phillips Hospital, will lead Orlando Health’s operations in Alabama.

The transaction is expected to close in fall 2024, subject to regulatory approval. Upon closing, the system will be renamed Baptist Health.

Under the agreement, Conifer Health Solutions, a Dallas-based subsidiary of Tenet, will sign a new, expanded 10-year contract to provide revenue cycle management services to Birmingham hospitals and related operations.

In April 2024, Tenet announced the completion of the sale of four hospitals in Orange and Los Angeles counties and related operations to UCI Health. Tenet also completed the sale of two hospitals in San Luis Obispo and related operations to Adventist Health.

For the 12 months ended June 30, 2024, publicly traded Tenet (NYSE: THC) reported that its equity interest in the Brookwood Baptist Health joint venture generated pre-tax income of approximately $12 million and adjusted EBITDA less minority interests of approximately $60 million, excluding interest expense of approximately $2 million and depreciation and amortization expense of approximately $46 million. The company estimates that it will record pre-tax accounting gains of approximately $375 million as a result of this anticipated transaction.