Even as it continues merger talks with the troubled hospital chain, Catholic Health Initiatives, Dignity Health sold its rehabilitation and occupational health division, U.S. HealthWorks for $753 million. The acquirer, Concentra Group Holdings, is jointly held by Select Medical Corporation (NYSE: SEM), Welsh, Carson, Anderson & Stowe and minority equity shareholders including Cressey & Company.
The combination will bolster both companies’ urgent care platforms as new payment models push for care delivery outside of hospital setting. Dignity Health will receive a 20% equity interest in the combined entity, valued at $238 million, and the remainder of the purchase price in cash.
U.S. HealthWorks Inc., a subsidiary of Dignity Health Holdings Company, operates rehabilitation and occupational healthcare centers with approximately 250 medical and onsite clinics in 21 states. Concentra operates 315 occupational health centers in 38 states.
Concentra Group Holdings, LLC is an occupational medicine and urgent care service provider previously owned by health insurer Humana Inc. (NYSE: HUM). In March 2015, Humana sold Concentra for $1.05 billion to a joint venture formed by principals Select Medical and Welsh, Carson. For Humana, the sale marked the end of its strategy to expand convenient and affordable healthcare for its membership base.
That $1.05 billion came in the form of a stock purchase agreement. Select Medical owned 50.1% of the joint venture, and Welsh, Carson claimed 49.9%.
Dignity Health is one of the nation’s largest not-for-profit healthcare providers. Its footprint includes 39 hospitals and several urgent- and occupational-care centers, imaging and surgery centers, home health, and primary care clinics in 22 states. It has a network of more than 9,000 physicians and 63,000 employees.
Select Medical is one of the largest specialty hospital and outpatient rehabilitation clinic operators, with 102 long-term acute-care hospitals and 21 acute rehab hospitals in 28 states and 1,608 outpatient rehabilitation clinics in 37 states and the District of Columbia.
This deal builds on Select Medical and Dignity’s joint venture, formed earlier this year, to build and manage a 60-bed acute inpatient rehabilitation hospital in the Las Vegas area, expected to open in 2019. That agreement also includes joint operation of 12 outpatient rehabilitation clinics around Vegas.
