You can now read 10 articles in a month for free on BostonGlobe.com. Read as much as you want anywhere and anytime for just 99¢.

The Boston Globe

Business

For-profit hospitals put to test in Mass.

The pending return of health care giant Tenet Healthcare Corp. to Massachusetts has the potential to shake up the state’s hospitals and doctors networks, which are already rapidly consolidating.

The for-profit system, which owns 49 hospitals in 11 states, will enter a marketplace much changed from the one it left in 2004, when the chain sold Saint Vincent Hospital in Worcester and the MetroWest Medical Center hospitals in Framingham and Natick to Vanguard Health Systems Inc. for $126.7 million.

Continue reading below

By agreeing last month to buy for-profit Vanguard for about $1.8 billion — a deal that will bring the three Massachusetts hospitals back into the Tenet fold — Dallas-based Tenet signaled that it has become more aggressive about expanding nationally at a time when more patients will be signing up for medical insurance under the new national health care law.

“The acquisition of Vanguard significantly increases our scale and geographic opportunity,” Tenet’s chief executive, Trevor Fetter, told analysts. Together, the two investor-owned health care systems control 77 hospitals in 16 states.

Fetter did not specifically address the Massachusetts hospitals in discussing the purchase of Nashville-based Vanguard, which is expected to close by the end of the year, and he was not available for comment this week. But Tenet’s vice president for communications, Steven Campanini, sounded bullish on the local medical centers.

‘All of the parties in Massachusetts are busily trying to assess what the Tenet acquisition means to them.’

Quote Icon

“The Massachusetts hospitals are in a very good position in market share” in Boston’s western suburbs and Central Massachusetts, he said. “That’s a strong-performing market.”

Tenet leaders said they have identified $100 million to $200 million in cost savings they plan to achieve throughout Vanguard, half during the first year, through overhead cuts, joint supply purchases, and other steps.

“Where it makes sense to improve efficiency, we’ll look at that,” Campanini said. “But Vanguard is a good operator of hospitals, and we look forward to bringing their systems into the company.”

The purchase also raises several questions that probably won’t be answered until it takes effect. Among them are what changes might be expected at the state’s three Vanguard-owned hospitals— Saint Vincent, Framingham Union Hospital, and Leonard Morse Hospital in Natick — and how the giant acquisition will affect Vanguard’s alliance with Tufts Medical Center in Boston, which has a clinical affiliation with the MetroWest hospitals and has jointly pursued the acquisition of Massachusetts community hospitals — thus far unsuccessfully — with Vanguard.

“From our perspective, it’s all systems go,” said Eric J. Beyer, chief executive of Tufts Medical Center, who noted the partners last year launched a health insurance plan, called Minuteman Health Initiative, and are broadening their joint clinical programs. “We provide value to them, they provide value to us, and we hope to continue and expand on that relationship.”

Tufts this week said the MetroWest Accountable Healthcare Organization, a group of 48 doctors aligned with the Framingham and Natick hospitals, and two other doctors groups had renewed their membership with the Tufts-affiliated New England Quality Care Alliance.

Erik G. Wexler, president of Vanguard’s New England Region, who negotiated the alliance with Tufts, said he hopes to continue leading the business under Tenet, but acknowledged no decisions have been made about the future of the Massachusetts hospitals.

Tenet’s Fetter said he hoped to retain talent from Vanguard. Vanguard vice chairman Keith Pitts has been tapped as Tenet’s vice chairman.

“They’ve been publicly supportive of what we’re doing, and we’re grateful for that,” Wexler said. “Massachusetts is the petri dish for health care reform. I think our experience here has helped Vanguard in other parts of the country and could be of value to Tenet, as well.”

Beyond hospital operations and its work with Tufts, Vanguard has loomed large in industry speculation about how the missing pieces in the state’s jigsaw puzzle of health care networks and partnerships might be filled. Because it had bid for several community hospitals, there was widespread expectation Vanguard might expand — and perhaps even buy the state’s other for-profit hospital chain, Steward Health Care System of Boston. Under one scenario, Vanguard would combine its three hospitals with Steward’s 11 and refer patients to Tufts for complex care.

Now that speculation will shift from Vanguard to Tenet.

“All of the parties in Massachusetts are busily trying to assess what the Tenet acquisition means to them and trying to proactively respond to the perceived threats and opportunities this presents,” said Carolyn Jacoby Gabbay, partner in the health service group at the Boston law firm Nixon Peabody. Noting the national scope of the deal, Gabbay added, “I don’t know if they [Tenet] have a Massachusetts-specific strategy. I’m not sure if they know yet.”

While the state was not considered an attractive market for Tenet nine years ago when it sold its Massachusetts hospitals to Vanguard, much has changed. The state’s landmark health care overhaul in 2006 led to most residents securing insurance coverage and created the online insurance marketplace that is the model for the exchanges now being set up across the country. It also helped spur the growth of global insurance payments that put doctors and hospitals on a fixed budget for care, replacing the fee-for-service payments that still dominate in other states.

All of these changes are spreading nationally, creating demand for the expertise of health care executives and organizations familiar with the Massachusetts marketplace.

“Massachusetts is the lab,” said Steven J. Tringale, president of the Boston consulting firm Tringale Health Strategies. “If you assume that other parts of the country are going to emulate significant parts of what’s happening in Massachusetts, there’s some real value to having operating experience in this environment. Almost every hospital in the state is looking for the right strategic partner, so there is an opportunity to grow. I don’t think all the shuffling is done yet.”

Robert Weisman can be reached at weisman@globe.com.

You have reached the limit of 10 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week