Orlando Health Completes $910 Mn Acquisition of 5 Tenet Healthcare Hospitals

The transaction involves five major hospitals—Brookwood Baptist Medical Center, Citizens Baptist Medical Center, Princeton Baptist Medical Center, Shelby Baptist Medical Center, and Walker Baptist Medical Center—and their affiliated operations.

Orlando Health has officially concluded the $910 million acquisition of majority stakes in five hospitals in Birmingham, Alabama, from Tenet Healthcare, finalizing the deal on Tuesday.

The for-profit Tenet Healthcare sold its 70% interest in Brookwood Baptist Health, a healthcare system in the Birmingham area, to Orlando Health, marking a significant shift in the state's healthcare landscape. 

The transaction involves five major hospitals—Brookwood Baptist Medical Center, Citizens Baptist Medical Center, Princeton Baptist Medical Center, Shelby Baptist Medical Center, and Walker Baptist Medical Center—and their affiliated operations.

Tenet Healthcare stated that the sale generated a pre-tax gain of approximately $375 million, with post-tax proceeds of around $790 million. 

Alongside the sale, Tenet secured a 10-year contract for its revenue cycle management business, Conifer Health Solutions, which will continue providing services to these hospitals.

Strategic Shift for Tenet

This acquisition is part of a larger strategy by Orlando Health to expand its presence in the US healthcare sector. Orlando Health, a non-profit academic system with $6.1 billion in revenue, has consistently aimed to strengthen its network of hospitals. With this deal, Orlando Health assumes day-to-day operations at these hospitals.

“This is a great day for Brookwood Baptist Health and Orlando Health,” said Thibaut van Marcke, Senior Vice President of Orlando Health, in a statement. He is set to lead Orlando Health’s operations in Alabama. 

“Our partnership offers a new era in healthcare for central Alabama. With our proven record of expanding care at partner hospitals, we are committed to making this healthcare system one of the best in the state and beyond.”

The acquisition has led to a rebranding effort, with Brookwood Baptist Health set to operate under the name Baptist Health. This move aligns the facilities with the existing Baptist Health System, which will retain a partnership role following the deal.

Brookwood Baptist Health to Be Rebranded

The Brookwood Baptist Health System is a joint venture with Baptist Health System, a faith-based organization that will continue as a minority partner post-acquisition. 

Amy Allen, Baptist Health System's president and CEO, expressed optimism about the collaboration.

“We’re thrilled to have Orlando Health as a partner,” Allen said. “Their commitment to excellence and improving patient care has earned them national recognition from top quality and patient safety organizations. This is a wonderful moment for our patients, physicians, staff, and community.”

Orlando Health’s latest acquisition reflects its ongoing efforts to expand its healthcare services. 

In addition to the Tenet deal, Orlando Health recently agreed to purchase three hospitals from the bankrupt Steward Health Care system for $439 million, with the transaction expected to close later this month. These moves highlight Orlando Health’s commitment to growing its healthcare footprint across the US.

Tenet's Realignment Strategy Continues

For Tenet Healthcare, the sale of these Alabama hospitals is part of a broader realignment strategy. The healthcare company has been offloading hospitals in markets that no longer fit its core priorities. 

Earlier this year, Tenet completed a $2.4 billion sale of three South Carolina hospitals to Novant Health, and it has another $975 million deal pending with UCI Health for four additional hospitals.

During recent investor meetings, Tenet CEO Saum Sutaria noted that the company’s disciplined spending has made its operations attractive to potential buyers. 

“Disciplined hospitals will prosper,” he stated, suggesting that Tenet's focus on core assets and operational efficiency has driven interest in its properties.

Orlando Health’s latest acquisition comes during a strong financial period for the non-profit system. The healthcare organization reported a nearly $500 million operating income for the 2023 fiscal year, with similar momentum continuing through fiscal 2024.

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