Ardent Health Services of Nashville is buying LHP Hospital Group of Plano, Texas, in a merger that will create what the companies claim is the second largest private, for-profit hospital in the country.
The terms of the transaction, which is expected to close in early 2017, were not disclosed.
Under the agreement, Ardent will assume LHP's management and operational responsibilities within each joint venture partnership. The transaction is not expected to affect the day-to-day operations of the affiliated hospitals, the companies said.
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Ardent expects to fund the transaction primarily through secured debt financing, as well as through equity capital provided principally by its majority owner, an affiliate of Equity Group Investments.
Ardent currently operates three health systems with 14 hospitals.
LHP operates five acute-care hospitals in Florida, Idaho, New Jersey and Texas with its joint venture partners, which include not-for-profit and academic medical centers.
The merged entity will have 19 hospitals across six states and $3 billion in revenues, according to the joint statement. Ardent will operate 3,200 patient beds and have approximately 18,000 employees, including more than 475 employed physicians.
Ardent Health is currently the eighth largest for-profit health system in the United States, according to Becker's Hospital Review. If it becomes the second largest as claimed, it will be behind only the largest, Community Health Systems of Tennessee, based on the number of acute care hospitals in the system.
The transaction will diversify and grow the company's quality portfolio of hospitals through partnerships with top-tier, not-for-profit and academic health systems, Ardent said.
"In addition to combining two organizations with similar operating philosophies and a strong focus on local partnerships and collaboration, this transaction dramatically enhances our scale, diversity and geographic reach," said David T. Vandewater, president and CEO of Ardent Health Services.
The Ardent management team will continue to lead the company with the assistance of key LHP executives. Ardent will remain headquartered in Nashville.
LHP Hospital Group is a privately held company established to provide essential capital and expertise to not-for-profit hospitals and hospital systems.
Many of its affiliations are joint ventures, including: Bay Medical Center in Panama City, Florida, a joint venture with Sacred Heart Health System; HUMC Mountainside in Montclair, New Jersey, a joint venture with HackensackUMC; HUMC at Pascack Valley in Westwood, New Jersey, a joint venture with HackensackUMC; Portneuf Medical Center in Pocatello, Idaho, a joint venture with Portneuf Health Trust; and Seton Medical Center in Harker Heights, Texas, a joint venture with Seton Healthcare Family.