Dignity Health makes a move to expand its urgent care, occupational medicine business

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Under the terms of the transaction, 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.

Dignity Health, one of the nation's largest healthcare systems, is seeking to form a new partnership to expand its occupational medicine and urgent care offerings.

The San Francisco-based provider and Select Medical Holdings Corp. announced on Monday that they had signed a definitive agreement to combine Concentra Group Holdings LLC, an occupational medicine and urgent care service provider, with U.S. HealthWorks, a subsidiary of Dignity Health Holdings Company, which provides similar services.

The companies said in the announcement that the partnership aims to strengthen the delivery of care through greater access and standardization of best practices improving health and wellness services for employers and employees.

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The deal is still subject to closing conditions, but the announcement said it will occur through an equity purchase and contribution agreement that will allow Concentra to acquire all of the issued and outstanding shares of stock of U.S. HealthWorks from Dignity Health Holdings. The transaction is targeted to close in the first quarter of 2018.

Once finalized, Dignity Health will own a 20% equity interest in the combined entity holding Concentra and U.S. HealthWorks, an occupational healthcare center operator with 250 medical and onsite clinics in 21 states.

RELATED: Urgent care centers help Dignity Health boost patient access, better manage population health in Bay Area

This is not the first joint venture of Select Medical and Dignity Health. Earlier this year they worked together to construct and operate a 60-bed acute inpatient rehabilitation hospital in the greater Las Vegas metro area. That facility is expected to open in 2019. The agreement also includes joint operation of 12 outpatient rehabilitation clinics in the Las Vegas area.

This new partnership will expand upon the relationship. Robert Ortenzio, executive chairman and co-founder of Select Medical, said that the latest deal will allow the organizations to join forces to “deliver best-in-class occupational medicine and urgent care to communities and corporate work sites nationwide.”

Daniel Morissette, senior executive vice president and chief financial officer at Dignity Health, said in the announcement that the partnership will “strengthen the delivery of clinical care, standardize best practices and improve service for employers and employees."

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The transaction values U.S. HealthWorks at $753 million. 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. Concentra will also redeem certain of its outstanding equity interests from the existing minority equity holders, and Select Medical will retain a majority voting interest in the combined entity following the closing of the transaction.

Dignity Health operates more than 400 care centers, including hospitals, urgent and occupational care, imaging and surgery centers, home health and primary care clinics in 22 states, with a network of more than 9,000 physicians and 63,000 employees. But the provider may become even bigger if its plans to merge with Catholic Health Initiatives moves forward. If that merger is completed, the joint venture would create one of the nation’s largest nonprofit hospital systems by revenue.

Select Medical operates 102 long-term acute care hospitals and 21 acute medical rehabilitation hospitals in 28 states, as well as 1,608 outpatient rehabilitation clinics in 37 states and the District of Columbia. Its joint venture subsidiary, Concentra, operates 315 occupational health centers in 38 states and provides contract services at employer worksites and Department of Veterans Affairs community-based outpatient clinics.

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