Issue link: https://beckershealthcare.uberflip.com/i/610563
23 2015 YEAR REVIEW in 10 of the Most Interesting Healthcare Transactions By Ayla Ellison F rom the growing trend of private equity investment in healthcare to major health systems coming together to increase market power and population health efforts, consolidation in the healthcare industry continued in 2015. Here are 10 of the most interesting healthcare industry transactions that made headlines in 2015. 1. SSM Health buys SLU Hospital e players: e deal involves St. Lou- is-based SSM Health, St. Louis University and Dallas-based Tenet Healthcare. e deal in a sentence: Aer owning SLU Hospital for 17 years, Tenet sold the facility back to Saint Louis University, which then contributed the hospital to SSM Health in exchange for a minori- ty membership interest and governance rights in SSM's St. Louis operations. Hospitals involved: SLU Hospital is a 365-bed academic medical center. When the deal closed in September, SSM said it would invest $500 million to build a re- placement hospital and outpatient center. What makes it interesting: e ex- change of governance rights involved in the transaction is significant. "Not only did the university retain an interest in the academic medical center itself, it actually gained a financial and governance inter- est in SSM's entire St. Louis system," says Newpoint Healthcare Advisors Chairman Joe Lupica. "is move weaves together town and gown, offering the university a link with community care. As population health grows more essential to the curric- ulum and training experience, that link advances SLU's educational and clinical missions," he says. 2. Tenet makes huge ambulatory play e players: e deal involves Dal- las-based Tenet Healthcare, private equity firm Welsh, Carson, Anderson & Stowe and Dallas-based United Surgical Partners International. e facilities involved: USPI's 49 am- bulatory surgery centers and 20 imaging centers across the nation. e deal in a sentence: Tenet entered into a joint venture transaction with Welsh Carson that combines the short-stay sur- gery and imaging center assets of Tenet and USPI to create a new short-stay sur- gery network. What makes it interesting: e trans- action made Tenet the largest U.S. provid- er of ambulatory surgery services. Tenet owns 50.1 percent of the new USPI, while Welsh Carson and other existing share- holders in USPI own the remaining 49.9 percent. Over the next five years, Tenet will have the option of acquiring the remainder of the joint venture. 3. Aetna's acquisition of Humana e players: e deal involves health in- surers Aetna, based in Hartford, Conn., and Humana, based in Louisville, Ky. e deal in a sentence: Aetna entered a definitive agreement in July to acquire all outstanding shares of Humana in a deal valued at $37 billion. What makes it interesting: If the deal goes through, the Medicare Advantage market would be significantly more con- centrated. ere is little or no competition in MA insurance markets in 97 percent of U.S. counties, according to an issue brief from the Commonwealth Fund. Humana is one of the nation's largest providers of MA policies, making it an attractive target for Aetna, but the combination of the two entities has the potential to substantially lessen competition in the MA market. 4. Anthem's takeover of Cigna e players: e deal involves Indianap- olis-based Anthem and rival health insurer Cigna, based in Bloomfield, Conn. e deal in a sentence: Anthem entered into a definitive agreement in July to ac- quire Cigna in a cash and stock transaction valued at $54.2 billion — a buyout that would create the nation's largest health in- surer by enrollment. What makes it interesting: With Aetna acquiring Humana and Anthem entering into a deal to take over Cigna, the health insurance landscape drastically changes to one with three key payers instead of five. Based on that, the Anthem-Cigna deal has received significant opposition from play- ers both inside and outside the healthcare industry. 5. Capella sold to real estate investment trust e players: e deal involves Capella Holdings — the parent company of Frank- lin, Tenn.-based Capella Healthcare — and Birmingham, Ala.-based Medical Proper- ties Trust. e deal in a sentence: MPT acquired Capella for $900 million in cash, which includes a $600 million investment in Capella's real estate and an investment of approximately $300 million in Capella's operating entities. Hospitals involved: Capella's hospi- tals include: Capital Medical Center in Olympia, Wash.; Carolina Pines Regional Medical Center in Hartsville, S.C.; Eastar Health System in Muskogee, Okla.; Ker- shaw Health in Camden, S.C.; National Park Medical Center in Hot Springs, Ark.; Saint Mary's Regional Medical Center in Russellville, Ark.; Southwestern Medical Center in Lawton, Okla.; and Willamette Valley Medical Center in McMinnville, Ore. What makes it interesting: is trans- action is one of the first between a hospi- tal operating company and a real estate investment trust. rough this collabora- tion, which was finalized in fall 2015, MPT will own Capella's real estate, while oper- ations of the health system's hospitals will be jointly owned and managed by MPT and Capella's senior management.