Conifer Health Solutions, a subsidiary of Tenet Healthcare Corp. (THC) has acquired SPi Healthcare. Shortly after this, Tenet Healthcare’s shares rose 1.2% to close at $58.84 last Friday. The deal was announced earlier on Sep 23, 2014.
The purchase consideration was $235 million. As per the deal, SPi’s chief executive officer joined Conifer’s senior management team.
The acquisition is mainly aimed at expanding Conifer’s Revenue Cycle Management (RCM) services for physician practices. Companies using revenue cycle management utilize technology to manage claims process efficiently in order to generate a steady stream of revenues. Conifer boasts a sound RCM services business.
With the takeover, Conifer will capitalize on SPi’s resources to create an integrated delivery network that enhances the operational performance of physician practices. This in turn will strengthen Conifer’s present role as a sole-source provider of RCM and value-based care solutions.
Tenet Healthcare has been focusing on widening Conifer’s RCM service portfolio by marketing these services to non-Tenet hospitals and other related entities. Such revenue cycle initiatives position the company to enhance its cash flow. Another similar deal that has boosted Conifer’s RCM business is the acquisition of Vanguard Health Systems in 2013.
Currently, Tenet Healthcare carries a Zacks Rank #2 (Buy). Other stocks in the healthcare services space that look attractive at current levels include Universal Health Services Inc. (UHS), HCA Holdings, Inc. (HCA) and VCA Inc. (WOOF). While Universal Health sports a Zacks Rank #1 (Strong Buy), HCA Holdings and VCA have the same Zacks Rank as Tenet Healthcare.
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