Tenet Healthcare Corporation THC inked a definitive deal to divest its two hospitals, affiliated physician practices and related operations to the California-based nonprofit, integrated health system, Adventist Health. The hospitals, named Sierra Vista Regional Medical Center and Twin Cities Community Hospital, serve the communities of San Luis Obispo county, across which Adventist Health has a widespread presence.

Subject to customary regulatory approvals, clearances and closing conditions, the transaction is likely to conclude in the spring of 2024 and fetch after-tax proceeds of $450 million to Tenet Healthcare. A pre-tax book gain of $275 million is also expected to stem out of the transaction.

Conifer Health Solutions, presently a part of the Hospital Operations and Services unit of Tenet Healthcare as a result of the recent segment reorganization, entered into a deal to offer hospital and physician revenue cycle services to Adventist Health. By leveraging enhanced technologies and AI-driven workflows, Conifer will look forward to enhancing cash flows and boosting patient engagement for Adventist Health.

The recent move bears testament to Tenet Healthcare’s sincere efforts to optimize its hospitals and other healthcare facilities portfolio. THC resorts to divestitures of healthcare facilities, which it no longer considers core to its long-term growth and synergy strategies. These measures open avenues for the healthcare services provider to direct more capital on business areas that fetch higher returns and subsequently, boost profitability. They are also meant to improve cash flows and lower the debt level of the company.

Tenet Healthcare has remained quite active on the divestiture front so far this year. In February 2024, it entered into a definitive agreement for divesting its four hospitals and related operations, situated in Orange County and Los Angeles County, to UCI Health. The transaction is also likely to close in the spring of 2024 and provide after-tax proceeds of roughly $800 million to THC. The proceeds will be utilized to reduce the debt level of the company and subsequently, its interest expenses.

Additionally, on the same day of disclosing the divestiture deal with UCI Health, Tenet Healthcare concluded the divestiture of three South Carolina hospitals and related operations to Novant Health within the targeted timeline of the first quarter of 2024. Even after divesting the facilities to UCI Health and Novant, their operations will continue to benefit from comprehensive revenue cycle management services provided by Conifer. This, in turn, is expected to fetch higher revenues to the Hospital Operations and Services unit in the days ahead. Other revenues, which include revenues from revenue cycle management services, reported as part of the abovementioned segment improved 2.6% year over year in 2023.