Private-equity backed urgent-care developer taps Dignity Health for California expansion

Mon Feb 29 13:41:16 PST 2016

February 9, 2016

Private-equity backed urgent-care developer taps Dignity Health for
California expansion 

<http://www.modernhealthcare.com/article/20160209/NEWS/160209862?utm_source=
modernhealthcare&utm_medium=email&utm_content=20160209-NEWS-160209862&utm_ca
mpaign=financedaily> Modern Healthcare

By Melanie Evans

The private-equity backed urgent-care developer GoHealth Urgent Care will
enter California in a joint venture with Dignity Health.

Atlanta-based GoHealth and Dignity, a health system headquartered in San
Francisco, plan to develop a dozen urgent-care centers together in Northern
California. GoHealth, backed by global investment firm TPG, has struck
similar deals with Portland, Ore.-based Legacy Health and Northwell Health,
the system formerly known as North Shore-LIJ Health System, based in Great
Neck, N.Y.

The joint company in California will be equally owned by GoHealth and
Dignity, executives said, and its first urgent-care centers will open this
spring in San Francisco, where Dignity owns two hospitals but does not
operate any urgent-care locations.

The fragmented urgent-care market is drawing significant attention from
providers and investors. Select Medical Holdings, Mechanicsburg, Pa., for
example, formed a joint venture last year with Welsh, Carson, Anderson &
Stowe to acquire occupational and urgent-care provider Concentra from Humana
for $1.05 billion.

GoHealth has expanded rapidly since it was founded in 2013 with two
urgent-care centers in a joint venture with five-hospital Legacy Health.
GoHealth and Legacy now operate 11 urgent-care centers in Portland and plan
to develop another 10. In New York, GoHealth and Northwell have launched 19
locations in a year and two more are expected to open within a week. The New
York joint venture is planning another 20 centers. GoHealth also says it
plans to enter another market beyond California this year.

Dignity's deal with GoHealth is its latest aimed at expanding its operations
beyond its 39 hospitals into clinics, workplaces and other ambulatory
locations. Dignity acquired U.S. HealthWorks, an occupational health and
urgent-care company, in 2013 for $445 million. The subsidiary operates 220
locations across 20 states but is more focused on occupational health, said
Dr. Todd Strumwasser, senior vice president of Bay Area operations for
Dignity.

Dignity is also an investor in telehealth company Doctor on Demand.

The Bay Area is an attractive market for development, with a tech-savvy,
younger workforce seeking more convenient access and developers that have
not kept pace with demand, Strumwasser said. "We believe that this market is
underpenetrated for urgent-care centers."

GoHealth is seeking to gain a significant foothold in markets where it
operates. "We don't dabble," said GoHealth CEO Todd Latz. "When we're in a
market, we're really committed to that market."

The company targets locations "where people spend their time, where they
live their lives," such as near grocery stories, Latz said.

Strumwasser said the new facilities will give Dignity an opportunity to
triage patients, treating those with less-severe illness and injuries and
sending the ones who really need emergency care to the hospital. "This is
more akin to a high-acuity office visit," he said. The lower-cost facilities
will be attractive not only to patients but also to health plans looking to
build affordable networks to compete for price-sensitive consumers, he said.

Dignity owns hospitals in Arizona and Nevada, and Strumwasser said the
system will consider expanding its GoHealth joint venture to other markets
based on performance.

Jeff Wells
Deputy Editor, CAL/AAEM News Service

Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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