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Speaker 1: This is Scott Becker with the Becker's Healthcare Podcast. I I'm thrilled today to be joined by Alan Condon, editor in chief of Becker's Healthcare. He does an incredible job of following what is going on with systems in the country, with what's going on with finances in the country, and and a lot more. Alan, I'm gonna tee it up for you. Give us a couple quick stories of what you're watching on the finance side and in health care today.

Speaker 2: Yeah. Absolutely. So, Scott, I think a couple of stories that I wanted to focus on today, focus kinda heavily on the revenue cycle space. Just kinda picking up on a few really big deals that we've seen recently and what's coming down the pipeline. So I think first and foremost, to to kick things off here with Big Big Deal just announced a report of yesterday at Becker's, hospital view on our CFO newsletter, also in our revenue cycle newsletter.

And that's Tenet Healthcare, big for profits, essentially regaining full control of its revenue cycle management subsidiary that's Conifer Health Solutions, as Carbon Spirit, huge huge nonprofit system as we know, exits that joint joint venture completely. So big, big deal. We've seen a lot of move in the Carbon Spirit, restructuring, focus on its core assets. It's offloading a couple hospitals with key assets, and this is, essentially, a next step in in what we're seeing coming down the pipeline in Coniferous Spirit from a strategy standpoint. So Coniferous Spirit is gonna pay just short just short of $1,900,000,000 to tennis over the next three years, while Conifer will pay about $540,000,000 to CommonSpirit, essentially acquiring its 24% minority stake in the company.

So Conifer will continue to provide revenue cycle services to common spirit throughout the 2026, but then once January 1 comes into play, that that that that partnership will be dissolved. So Tenet, as we know, been been offloading hospitals for quite some time. Again, this will really take 100% equity control of its Conifer Health solution subsidiary, essentially giving you a greater flexibility to support the long term growth of Conifer Health, really looking to bolster it by expanding investments in AI, in automation, really bolstering, strengthening its global, operating capabilities. So I I think Tenet is quite interesting, and I believe last year, the year before, it had sold about 14 hospitals for substantial substantial returns. What's interesting about some of those those hospital sales on tenant side is that it has structured some of those deals in a way that Conifer becomes the provider or continues to be the provider of revenue cycle management services to the hospitals that it sells.

So Orlando Health acquired a bunch of, tenants hospitals last year. Kind of for it turns out to be the the exclusive provider revenue cycle management services for those hospitals, so on and so forth. One big deal, not over yet, but I think just announced as reported recently, we're gonna tune into tenant's, fourth quarter earnings call, I believe, next week, which no doubt that'll be a huge sticking point, a huge talking point. We kinda pull out a little a few more details on that deal. But big, big deal in the revenue cycle management space that I wanted to call out there, Scott.

Speaker 1: No. That's fascinating. And what drives some of that? What drives this this this going on? Talk a bit about that because I do think it's fascinating, and and thank you.

Tell us a bit about what drives this this conifer common spirit tenant thing. But it seems like partially, they probably did the deal originally. Common spirit gets part of it. Common spirit promises through the revenue cycle with them. Common spirit's no longer to do the revenue cycle with them.

So now common spirit ends up selling back their shares in Conifer. Is there any more detail? I mean, that's how a lot of these deals tend to work. I don't have details on that deal specifically. But is there any information out there on how this deal why this is going on?

Speaker 2: Yeah. I mean, absolutely. I think a bit more detail will be coming out, no doubt in the common spirit earnings call, the investor call coming up, and the tennis investor call coming up. I think this deal was going back as early as 2032 before the common spirit big merger was in place. A A ten year contract just got over the line.

So I think, again, common spirit with that minority stake around about 24% in the overall company. But I think from a strategic standpoint, really, really smart move on on tenant's part as well. Huge, huge investment in the outpatient space, offloading a lot of the inpatient hospitals, and really focusing on outpatient growth, ASCs. No doubt, Conifer is a huge, huge, subsidiary that is looking to grow as well as revenue cycle becomes more prominent, as AI becomes more deeply integrated, deeply embedded across revenue cycle. So no doubt some really interesting things to come there, and we'll we'll be tuning in in the in the upcoming earnings call to put out some more details for our audience as well.

But I I think it ties nicely into the kinda the the next story that I wanted to touch on, Scott, as well as as you're kind of staying on the revenue cycle trend here. Community Hospital Corporation, this is a hospital company headquartered in Texas. They just today have announced that they're launching their own revenue cycle management company specifically targeted at helping rural and community hospitals. Companies called Options RCM, again, offering the the full spectrum of technology and services across the entire revenue cycle to rural providers, community providers. Hospitals can choose to opt in for support with specific functions, or they can go full outsource, outsource the entire revenue cycle to this company.

I think this is quite an interesting development there, but it seems to be a bit of an emerging trend as there is such a big gap in the market here for revenue cycle emerging companies to help rural hospitals and providers specifically, going back to the CEO and CFO roundtable in November here in Chicago, I had the pleasure of sitting down with Chris Harrison, former CFO who's recently been the CEO of Quorum Health. So just for for listeners who might be, as well acquainted with the system, Quorum Health is a for profit system headquartered in Tennessee that was spun out of community health systems, a couple years before the pandemic. So Chris seemed to see that this, this Quorum Health is launching their own rural hospital MSO focused on on on revenue cycle management as well. So huge, huge part of Coram Health's growth strategy, launching this rural rural hospital MSO revenue cycle management company. I think the the the wider question and the wider backdrop against all this is, I think with a big look at what CMS has done with that $50,000,000,000 rural health transformation fund, that's drawn significant interest from consultants, from vendors.

So I think we're seeing tenants big move taken back a 100 Conifer Community Hospital Corporation launched their own revenue cycle management company. Quorum Health also launching their own revenue cycle management company. Those two companies specifically focused on rural hospitals, community hospitals, rural providers. So really interesting developments in there. No doubt we see rural hospitals in dire need of some support in this in this way, shape, or form and significant area of growth for for some of these companies as well.

Speaker 1: It's literally a fascinating discussion because there's two things that overlap there. One, we're seeing a lot of different consulting firms and organizations trying to chase some of this money that's going into rural health care under this new act. So we're seeing a lot of that. I can't even believe the amount of discussions of people trying to chase those dollars. That's not good or bad.

Just observation. Second is revenue cycle in our insane health care system remains a huge business area as five to 10% of all dollars allocated to health care somehow or another flow through the revenue cycle providers, revenue cycle operators, and the revenue cycle. So it remains a huge business in so many different ways. Just absolutely fascinating. Alan, anything else you wanted to comment on there?

I I find the stuff with, the Conifer stuff to be fascinating. Community Health Corp launching a revenue cycle business, Quorum Health, which at one point was a subsidiary of Community Health Systems back in the day, doing whatever they're doing in rural. Just fascinating to see these different activities and different initiatives aimed at where some of the dollars are flowing.

Speaker 2: Yeah. I think you hit the nail on the head. Not not too much to add, but I think just the backdrop of the $50,000,000,000 rural health transformation fund, I think you hit the nail on the head there, Scott. Just as the last comment from Chris, who I spoke to recently, the the CEO of Quorum Health again, said that his goal, I guess, with this MSO, that's revenue cycle management based targeting rural providers, wants to build something that's by rural providers, for rural providers before some of those outside entities with maybe less mission alignment end up dominating that space. So it kinda seems like a bit of a race to the to to kinda get this thing started at the moment with that, rural health transformation fund.

A lot of folks chasing the dollars there. Great observation on your part. So certainly interesting to keep behind this space over the next couple of quarters.

Speaker 1: And certainly a lot of rural CEOs concern that the money's gonna get scattered to so many different places and not really help rural systems and rural health care. There's we've heard a lot of that as well, those concerns. So just absolutely fascinating. Yeah. I wanna I wanna thank you for joining us today on the Becker's healthcare podcast.

Thank you so much.

Speaker 2: Scott, it always a pleasure. Thank you so much.