Fresenius Medical Care Acquires Cogent Healthcare
By Jof Enriquez,
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Fresenius Medical Care (FMC), the world’s largest provider of dialysis products and services, recently acquired hospitalist group Cogent Healthcare through its subsidiary Sound Inpatient Physicians. The transaction, which will create the largest private provider of hospitalist and intensivist services, is expected to be completed by the end of the quarter.
FMC said it would finance the purchase wholly in cash but did not disclose how much it paid for Tennessee-based Cogent. However, Reuters estimates the deal to be worth more than $375 million. Over the summer, FMC took a majority stake in Sound Physicians for approximately $600 million. The Cogent takeover by FMC’s new subsidiary is part of the company’s strategy to expand its core dialysis services to a $5 billion care-coordination business by 2020. With the acquisition, FMC looks to broaden its offerings in response to U.S. insurance initiatives that will use a bundled payment reimbursement system for health services for patients with chronic conditions, including end-stage renal disease.
“If you’re Fresenius and you’ve got hospitalist services to complement your business lines, you can take care of this expensive patient more efficiently,” Frank Morgan, an analyst with RBC Capital Markets in Nashville, said in an interview with The Tennessean. “It validates the strategic value of the role a hospitalist serves in the health care system. Hospitalists can help reduce health care spending, which is important to everyone. By moving patients through hospitals more efficiently and quickly, it can save money and provide better outcomes through better coordination of care.”
After taking over Cogent, Sound Physicians will have a network of 2,250 providers including physicians and advanced care practitioners in over 180 hospitals across 35 states, according to a statement by FMC. The German company estimates that Cogent will reach approximately $250 million in revenue in 2015 and expects the purchase to increase total earnings within 18 to 24 months.
“With this acquisition, Sound Physicians continues to augment our network of dialysis, cardiac and vascular care centers, renal pharmacy and full service and specialty laboratories to help us better address the full spectrum of our patients’ health care needs,” Rice Powell, FMC CEO, said in the statement.