Tenet Eyes Rival’s Hospitals
Tenet Healthcare Corp. will consider buying hospitals from rival Columbia/HCA Healthcare Corp. as it reorganizes, particularly in Southern Florida and Southern California, Tenet’s chairman and chief executive said.
Jeffrey Barbakow confirmed that Santa Barbara-based Tenet, the second-largest U.S. hospital chain behind Columbia, has also looked at Columbia hospitals in Atlanta and Boston for possible purchase.
He declined to say whether the interest has progressed to offers.
The reviews are in line with Tenet’s emphasis on bolstering existing markets rather than unbridled expansion to new ones, Barbakow said.
“We would have conversations about any marketplace where we want to grow, and Columbia happens to be in some of them,” Barbakow told the Bloomberg Forum.
Shares in Tenet fell 63 cents to close at $33 on the New York Stock Exchange. Shares in Nashville-based Columbia fell 38 cents to close at $30.44, also on the NYSE.
While Columbia spent the better part of the decade expanding its geographical territory, Tenet grew by strengthening the markets where it already had a foothold, Barbakow said.
The company constantly reviews buying opportunities among rivals in existing markets, he said.
In Southern California and Southern Florida, for example, Tenet has tripled its number of hospitals over the last four years, he said.
Columbia’s acquisitions halted abruptly in July, when new management took over amid a wide government Medicare billing probe of the company.
New management has reversed strategy, saying a smaller company with greater focus on the core hospital business will get better returns.
Last month, Columbia said it was reorganizing and may spin off or sell as much as a third of its approximately 340 hospitals.
The Boston Globe said last week that Tenet wanted to buy Columbia’s Metrowest Medical Center outside Boston, citing a Tenet executive. Meanwhile, Columbia’s Georgia division confirmed that Tenet had expressed interest in the company’s hospitals there.
Barbakow declined to comment on Columbia’s plans and its about-face, which includes plans to sell its fast-growing home health-care business.
Tenet still sees value in expanding beyond traditional hospital business to include home health, surgery centers and other outpatient services, he said.
“We’ve had a very consistent approach,” Barbakow said, “and we still think integrated health systems make a lot of sense.”
The two companies had been in merger talks before the management shake-up at Columbia in July. Barbakow refused to comment on whether any such discussions still exist, or under what circumstances they might resume.
