Tenet Healthcare Corporation announced Tuesday that several of its subsidiaries have entered into a definitive agreement to transfer the assets of Daniel Freeman Marina Hospital on Lincoln Boulevard in the Marina area and two other acute care hospitals — Daniel Freeman Memorial Hospital and Centinela Hospital Medical Center in Inglewood — to Centinela Freeman HealthSystem, a newly formed entity.
David Langness, director of corporate communications for Tenet HealthSystems, said the transfer of the hospitals could be completed “by the end of October.”
Daniel Freeman Marina Hospital is a 166-bed acute care community hospital and offers surgical and medical services including orthopedic and general surgical services, an intensive care unit, and a telemetry unit.
The Lincoln Boulevard hospital also offers emergency room services and diagnostic testing services.
Information on Daniel Freeman Marina Hospital,
Daniel Freeman Memorial Hospital has 358 beds and Centinela Hospital Medical Center has 370 beds.
Terms of the transaction were not immediately disclosed.
The new entity taking over the three hospitals will call itself Centinela Freeman HealthSystem.
The ownership of the new health group includes physicians, the Los Angeles-based private investment group Westridge Capital, members of the current hospital management and local community leaders, including Ira Kaufman, who is credited with helping to build Centinela Hospital Medical Center from its roots as the 12-bed Milton Hospital.
Michael Rembis, who has served as the chief executive officer at Centinela Hospital Medical Center since 1999, will serve as chief executive officer.
Harris Koenig, current chief executive officer of Daniel Freeman Marina Hospital and Daniel Freeman Memorial Hospital since 2002, will serve as senior vice president of the new health system.
Michael Finnigan, former chairman and current vice chairman of Centinelaís governing board, will serve as chairman of the board of the new entity. He reviewed the new groupís entry into taking over the three hospitals.
“Immediately following Tenetís announcement to sell these hospitals, it became clear that this was the perfect opportunity to bring local ownership and involve the hospitalsí physicians,” Finnigan said.
“We have been focused on creating a unified three-campus hospital system that would maximize the strengths of each hospital,” Finnigan added, calling the sale of the three hospitals, “a great day for healthcare on the Westside.”
Kaufman said Westridge Capitalís decision to participate in the hospital purchase “was based on a strong business model that includes partnering with a large number of highly talented and community-focused physicians, the retention of an experienced management team and a vision of an efficient and strong three-campus health system to serve the Westside of Los Angeles.
“We are confident these hospitals will continue to provide the highest level of care to these communities and have the commitment of a wide range of talented partners to achieve this goal,” said Jonathan Davidson, also with Westridge Capital.
In announcing the sale of its three hospitals, Tenet said the buyer is a “new community-based health care delivery network formed for the specific purpose of creating a locally-owned health delivery system dedicated to the preservation of these three community hospitals and the enhancement of services.
“We are pleased these important community hospitals have been acquired by Centinela Freeman HealthSystem, a new entity comprised of physicians, community members and executives with a longstanding record in hospital management,” said W. Randolph Smith, president of Tenetís former Western Division, who is overseeing the companyís divestiture program.
Under the agreement, Centinela Freeman HealthSystem has committed to offer employment to substantially all employees at the three hospitals and honor any labor agreements.
In addition, the new owner plans to continue to operate these hospitals as acute care facilities with emergency departments.
The transaction is expected to be completed by Sunday, October 31st, subject to regulatory approvals.
In addition, Centinela Freeman HealthSystem has agreed to comply with conditions placed by the California attorney general on future operations of these three facilities.
“Tenet continues to make progress on its divestiture program,” Smith added.
“We continue to have negotiations and discussions for the remaining hospitals with operators who are committed to keeping the facilities open and who are dedicated to their communities.
“Tenetís management team continues to work toward meeting the original targets for the previously announced divestiture program, both in terms of completing the sale process by year-end, and generating expected net proceeds of approximately $600 million, including the value of tax benefits.”
The three hospitals are among 27 facilities Tenet announced late January that it would divest — 19 in California, two in Louisiana, three in Massachusetts, two in Missouri and one in Texas.
In June, Tenet completed the sale of Brownsville Medical Center in Brownsville, Texas, to Valley Baptist Health System. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $68 million.
In July, Tenet announced it had entered into a definitive agreement to sell four hospitals in the East Los Angeles area to AHMC Inc. Estimated net after-tax proceeds, including the liquidation of working capital, are expected to be approximately $95 million. That transaction is expected to be complete by Thursday, September 30th.
Also in July, Tenet returned the 232-bed Doctors Medical Center ñ San Pablo, in San Pablo, California, to the West Contra Costa Health Care District, the entity from which the company had been leasing the facility.
Tenet also announced that a company subsidiary has completed the sale of Doctors Hospital of Jefferson, a 124-bed acute care hospital in Metairie, Louisiana, to East Jefferson General Hospital.
Net after-tax proceeds, including the liquidation of working capital, are expected to be approximately $33 million. Negotiations with potential buyers for the remaining 17 hospitals are ongoing.