Tenet Inks Deal for University Hospital
By LAURENCE DARMIENTO
Staff Reporter
Tenet Healthcare Corp. has cut a deal to acquire another Los Angeles hospital, even as it copes with the fallout from its last local acquisition.
The Santa Barbara-based company has agreed to buy the USC/Kenneth Norris Jr. Cancer Hospital in East Los Angeles from the University of Southern California for $35 million.
Tenet already has a contract to manage the 60-bed specialty hospital and owns the university’s flagship USC University Hospital. This deal would take USC entirely out of the hospital ownership business where it does not want to be while funding an upgrade for the 20-year-old facility.
“We see this as a way to leverage and enhance our cancer work,” said Dr. Stephen Ryan, dean of the university’s Keck School of Medicine.
USC estimated that without the sale it would have to spend $60 million to expand and upgrade the hospital over the next five years.
Terms of the agreement, which must be ratified by the state Attorney General, call for Tenet to move the inpatient beds at Norris to a new $90 million tower it is building for the expansion of USC University Hospital. It would then renovate the existing Norris facility for expanded outpatient services in breast and urological cancers.
Tenet has committed to spending $10 million on hospital capital improvements over five years, while the university plans to spend some of the funds it receives for additional research and educational initiatives.
The deal, given Tenet’s on-going relationship with USC, is a far cry from its purchase of the Daniel Freeman Memorial and Marina hospitals last year for $57 million, a purchase that still haunts Tenet.
The company has found itself in a fight with community activists, doctors and the attorney general over plans to close the Marina facility and sell it for its real estate value.
“Tenet will probably face more scrutiny (of this purchase) than it would have last December” when the Freeman deal had yet to be completed, said Leslie Bennett, a staff attorney with Consumers Union.
Attorney General Bill Lockyer, who sued to stop Tenet from closing the Marina hospital, said he would look at the deal closely but indicated it was different from the Daniel Freeman purchase.
“There are existing public benefits from the current partnership (between Tenet and USC) that may be enhanced by the investment Tenet intends to make,” he said in an interview.
Greg Harrison, a Tenet spokesman, said the company planned to work closely with Lockyer to address any concerns he might have.
