LifePoint Health and Kindred Health closed their trade A new company was formed on Thursday, consisting of 61 long-term acute care hospitals in Kindred and 18 community hospitals in LifePoint.

ScionHealth expects annual revenue of approximately US$3.5 billion and is independently operated by former LifePoint and Kindred executives and a new board of directors. Executives said that Kindred CEO Benjamin Breier left the company after the transaction was completed, but the company does not expect “significant unemployment” or service line integration.

LifePoint CEO David Deere told Modern Healthcare that “it makes the most sense to split the two companies with the resources they have,” adding that the transaction will not affect LifePoint’s long-term partnership. “Starting Scion will enable our two companies to more fully respond to the needs of patients.”

LifePoint, with annual revenue of approximately US$9 billion, will take over Kindred’s rehabilitation and behavioral health businesses, as well as most of its acute rehabilitation departments, outpatient centers, and post-acute facilities. It now has approximately 65 community hospitals, 30 behavioral health and rehabilitation hospitals, 15 other hospitals under construction, 170 outpatient and post-emergency facilities, and 50,000 employees. Before the transaction, LifePoint had 84 hospitals, 85 emergency and outpatient facilities, and 48,000 employees.

The 18 hospitals sold by LifePoint are mainly located in the smaller markets of for-profit hospital chains. The two companies said that under the leadership of Louisville, Kentucky-based ScionHealth, these hospitals will receive more tailored attention in service line development and clinician recruitment.

Rob Jay, CEO of ScionHealth and former Executive Vice President of LifePoint Integrated Operations, said that ScionHealth’s long-term care hospitals and community hospitals are not close to each other and will not directly refer patients.

“One of the unique aspects of this is the infrastructure and corporate support center in Louisville,” he said. “This will allow us to quickly grow and integrate different parts of the business instead of starting new things.”

Executives said that LifePoint and ScionHealth will sign a transition service agreement to ensure that the new company receives labor, IT, billing, legal, and other types of support for a period of time after the transaction. The financial details of the transaction and the earnings of the private company were not disclosed.

Dier said that LifePoint and Kindred have complied with all Federal Trade Commission requirements and pointed out that there is no market overlap between the two companies. The statutory waiting period under the Hart-Scott-Rodino Act has expired, but the FTC can still challenge the transaction after it is completed.

Although regulators are more critical of horizontal transactions, such as when hospitals buy other hospitals, vertical integration (such as the combination of emergency and post-emergency facilities) is usually less scrutinized.

The FTC is revising its vertical merger guidelines, although Antitrust experts are skeptical The update will block the proposed transaction.

Private Equity Company Support LifePoint and Kindred.Apollo Global Management get LifePoint was acquired for USD 5.6 billion in 2018, and TPG Capital partnered with Wales, Carson, Anderson and Stowe with Humana——Buy In 2017, Kindred separated the long-term care and home healthcare businesses for US$4.1 billion.Centaur Recommend to buy In April of this year, Kindred acquired the remaining shares of Kindred’s Family Health Division for US$5.7 billion.