Tennessee-based LifePoint Health and RCCH HealthCare Partners signed an agreement to merge, forming a joint entity with a combined $8 billion in revenue.
Apollo Global Management, an investment firm that which owns RCCH, will acquire LifePoint for $5.6 billion. The acquisition value includes about $2.9 billion in debt and minority interest, according to an announcement.
If the merger is finalized, the joint health system will operate as LifePoint and include 84 non-urban hospitals across 30 states and regional physician practices, outpatient centers and post-acute care providers. The unified system would also include 7,000 physicians, 16,000 employees and 24,000 licensed beds.
William F. Carpenter, current CEO of LifePoint, would oversee the joint health system.
"LifePoint and RCCH are aligned in our missions and commitment to ensuring that non-urban communities across the country have access to quality care," Carpenter said in the announcement. "Together, we can extend this shared focus while generating new opportunities for growth and partnerships that will help us navigate the changing healthcare dynamics."
LifePoint reported a net loss of $5.3 million in the first quarter of 2018, amid a 2.2% downtick in admissions and a loss of $3.2 million year over year in Medicare and Medicaid electronic health record incentive payments.
The system announced that it would divest three hospitals in Louisiana during the first quarter, and it expects to make $20 million on those deals.
The deal with RCCH and Apollo was unanimously approved by LifePoint's board of directors, and the system could solicit alternative acquisition proposals between now and August 22. The deal, should it clear that window and regulatory approvals, should close in the "next several months," the systems said in the announcement.
Providers' thirst for mergers has yet to be slaked, and several high-profile deals have been announced already this year. Sanford Health and the Evangelical Lutheran Good Samaritan Society—two of the largest employers in South Dakota—are moving forward with a deal, and Bon Secours Health System and Mercy Health announced plans to merge and form the country's fifth-largest Catholic health system.
There were more mergers announced in the first quarter of 2018 than that same quarter in 2017 or 2016, according to an analysis from Kaufman Hall, and the value of healthcare mergers is also on the rise.
However, experts warn that consolidation rarely pays off for patients in the form of lower costs, and that these deals can actually pose significant safety risks.