Transactions: LHC Group Strikes JV in Tennessee, Advocate Merger
LHC Group Enters Joint Venture for Home Health Care in SE Tennessee
LHC Group (NASDAQ: LHCG), one of the nation’s largest home health care providers, and Erlanger Health System, a multi-hospital system based in Chattanooga, Tennessee, finalized a joint venture worth roughly $7 million in annualized revenue. The transaction includes a facility that provides both skilled home health care and non-skilled community-based services in Chattanooga, Tennessee, and the southeast part of the state.
Lafayette, Louisiana-based LHC Group provides non-acute care services via home health, hospice and community-based services, as well as some facility-based services. It partners with 75 health systems, encompassing more than 250 hospitals across the U.S. In Tennessee, it has 32 home health locations and seven hospice locations.
The facility, which will operate under the name Erlanger ContinuCare Home Health, will provide skilled home health care and non-skilled community-based services. LHC Group will purchase majority ownership of the Chattanooga facility and assume management responsibility.
Erlanger ContinuCare Home Health will service 11 counties, with total admissions per year projected to be 786, LHC Group told Home Health Care News in an email.
LHC Group expects yearly revenue of about $7 million from the joint venture. It does not expect a material effect to its diluted earnings per share for 2017, according to a press release.
Erlanger Health System has five hospitals in Tennessee and six emergency departments, including a Level I Trauma Center, which provides the highest level of trauma care. The health system also has an academic teaching hospital through its affiliation with the University of Tennessee College of Medicine Chattanooga. It treats more than 250,000 patients each year.
Advocate Health Care and Aurora Health Care to Merge
Advocate Health Care, a not-for-profit, mission-based health system based in Downers Grove, Illinois, and Aurora Health Care, a not-for-profit Wisconsin-area health care provider, announced plans to combine, creating Advocate Aurora Health. It will be the 10th-largest not-for-profit, integrated health care system in the U.S., serving almost three million patients annually, according to an announcement.
Advocate Home Health Care was listed at No. 36 in LexisNexis’ 2017 Top 100 Home Health Care Agencies list, with market share of 0.23%.
Advocate is the largest health system in Illinois, operating almost 400 sites of care and 12 hospitals. Aurora offers services at sites in more than 30 counties throughout northern Illinois and eastern Wisconsin. The two systems have a 20-year relationship through the joint ownership and operation of ACL Laboratories, a community-based testing lab based in West Allis, Wisconsin.
The new organization is expected to have combined yearly revenue of about $11 billion. Advocate Aurora Health is expected to operate more than 500 sites of care and employ almost 70,000 associates and caregivers, in addition to operating 27 hospitals and employing more than 3,300 physicians. The deal is a “50-50 merger,” according to the Chicago Tribune. Neither system will pay the other cash, the paper added.
Under the agreement, the new organization will have a single board of directors with an equal number of members from Advocate and Aurora. Jim Skogsbergh, Advocate president and CEO, and Nick Turkal, Aurora president and CEO, will serve as co-CEOs. The deal is subject to state and federal regulatory review and approval, with closing expected by the middle of next year.
Written by Maggie Flynn