Select Medical, Dignity Health to merge urgent care business

Two of the top operators of urgent care centers have entered into a definitive agreement to combine their business into one of the largest in the industry.

Under the agreement, Mechanicsburg, Pennsylvania-based Select Medical’s urgent care division, Concerta Group Holdings, will purchase all shares of San Francisco-based Dignity Health’s U.S. HealthWorks subsidiary, which will be valued at $753 million. Dignity will take a 20 percent equity interest, valued at $238 million, in the new combined entity, with the rest of the purchase price coming in cash.

“We are excited about our partnership with Dignity Health, which enables us to join forces and deliver best-in-class occupational medicine and urgent care to communities and corporate work sites nationwide,” Robert A. Ortenzio, executive chairman of Select Medical said in a statement. “Together, we will provide high-value, outcome-based care for thousands of patients every day.”

Select Medical’s Concerta division and Dignity’s U.S. HealthWorks were already the first- and fourth-largest urgent care center operators, according to January 2017 rankings released by the Journal of Urgent Care Medicine. The two parent companies also operate many other facilities, including Select Medical’s 102 long-term acute care hospitals. Dignity operates 39 hospitals, which are part of a separate proposed merger with Catholic Health Initiatives.

The two companies had worked together before on a joint venture in Las Vegas involving a new 60-bed inpatient rehabilitation hospital and 12 outpatient rehab clinics.

“Caring for America's workforce creates a healthier population which means more productivity for business, a stronger economy, and connected communities,” said Dignity CFO Daniel Morissette. “Combining the two organizations will strengthen the delivery of clinical care, standardize best practices and improve service for employers and employees.”

Healthcare’s consolidation trend has been moving towards outpatient sites like urgent care in 2017 as health systems see it as a stronger sector for profitable growth. Another large operator of urgent care centers, American Family Care, secured a $1 billion investment from a private equity firm in July to fuel its own expansion plans.