May 17, 2020

Ventas to Buy Ardent Health Services for $1.75B

M&A
M&A
Admin
3 min
Ardent management says that the infusion of cash will help the hospital operator expand its presence and grow into new markets.
The real estate investment firm Ventas, Inc. (NYSE: VTR) announced on Monday, April 6 that it will acquire privately-owned Ardent Medical Services (with...

The real estate investment firm Ventas, Inc. (NYSE: VTR) announced on Monday, April 6 that it will acquire privately-owned Ardent Medical Services (with its affiliates Ardent Health Services)  for $1.75 billion in cash.  

A premier provider of health care services and one of the ten largest for-profit hospital companies in the U.S., Ardent Health Services will be entitled to distribute up to $75 million in excess cash to its existing shareholders. The transaction is expected to be immediately accretive to Ventas’s normalized funds from operations (“FFO”) per share by $0.08 to $0.10 in the first full year after close.

Based in Nashville, Ardent Health Services is owned by private equity funds managed by Welsh, Carson, Anderson & Stowe. The company generates around $2 billion in annual revenues, with 50% of its revenue derived from commercial payers. 

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Following closure of the deal, which is expected in mid-2015, Ventas says it will separate Ardent Health Services' hospital operations from its real estate and sell operations to newly-formed entities managed and owned by Ardent and other equity sources. Ventas may own up to 9.9% of the new company. 

Ventas will own ten high-quality hospitals (and related real estate) operated by Ardent under the names BSA Health System in Amarillo, Texas, Hillcrest HealthCare System in Tulsa, Oklahoma and Lovelace Health System in Albuquerque, New Mexico. These assets include acute care, heart, rehab and women’s health hospitals, comprising approximately 3.2 million square feet and 2,045 beds.

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“This transaction builds upon our excellent track record of executing innovative and value-creating opportunities, and solidifies our leadership position in healthcare real estate,” said Ventas Chairman and Chief Executive Officer Debra A. Cafaro. “The addition of Ardent’s platform, which includes high-quality assets with significant market share in three key markets, and a highly-regarded hospital management team, creates a strong avenue for growth in the attractive hospital real estate market. The transaction also increases our diversification by property type and operator. We look forward to partnering with Ardent’s seasoned management team as a best-in-class operator to grow its business.”

David T. Vandewater, President and Chief Executive Officer of Ardent, said in a press release, “We have built a leading U.S. hospital franchise, currently focused on three key markets with incredible growth potential. The current management team and Ardent employees are excited about this agreement with Ventas and we look forward to expanding Ardent and capitalizing on the significant growth opportunities we see in the immense, highly fragmented U.S. hospital market. With this strong capital and operating partnership, we can expand while continuing to serve patients and our communities.”

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Jun 19, 2021

Driving sustainability in medical device production

medicaldevices
Sustainability
recycling
biotechnology
George I’ons
5 min
George I’ons, Head of Product Strategy and Insights at Owen Mumford Pharmaceutical Services on how technology is driving sustainability 

Environmental protection and stewardship are rapidly rising to the top of the corporate agenda and medical device businesses are no exception. The healthcare sectors of the United States, Australia, Canada, and England combined emit an estimated 748 million metric tons of greenhouse gases each year, an output greater than the carbon emissions of all but six nations worldwide. In order to curb this situation various European standards have been introduced. 

The Waste Electrical and Electronic Equipment (WEEE); Restriction on Hazardous Substances (RoHS); Registration, Evaluation, and Authorisation of Chemicals (REACH) and the Energy Using Products (EuP) regulations have all significantly altered manufacturing processes, specific labelling, compliance with disposal restrictions, and creation of instructions for end-of-life management and recycling.

At the moment many medical devices are currently exempt from these regulations but several directives, including RoHS and WEEE, are in the process of being reviewed and could be applicable in future. This is especially relevant for devices that are ‘connected’ and have a digital monitoring component which then brings them under the regulatory purview of authorities that govern devices with electronic components.

Safety, Usability and Sustainability

While medical device manufacturers have been working to respond to increasing demand for environmental sustainability from the market, they also have to contend with a key element of their mission: to ensure safety and usability to healthcare workers and patients. Parenteral and other invasive devices are strictly regulated to help reduce the risk of Healthcare Acquired Infection which typically runs as high as 5% and 8% in most developed countries, according to the European Centre for Disease Prevention and Control. As a result, they typically contain disposable single-use plastic elements.

At the same time, many hospitals and purchasing organisations have started to recognise that sustainable purchasing practices play a pivotal role in reducing costs over time. Many GPOs have appointed and empowered Senior Directors of Environmentally Preferred Sourcing who are successfully implementing the sustainable purchasing business case. In addition global pharmaceutical companies are increasingly creating senior positions with sustainability objectives as key to the role.

Medical device disposal is a particularly burning issue; generally carried out through incineration in the EU, it typically releases nitrous oxide, as well as known carcinogens including polychlorinated biphenyls, furans and dioxins. Some of the strategies trialled by manufacturers to reduce waste matter destined to incineration include sterilisation and reprocessing.

Sterilisation, however, falls short on the environmental front, and may consume more energy and produce more emissions than incineration itself. In the United States for example, 50% of all sterile medical devices are sterilised with ethylene oxide but since this method releases harmful emissions, the US Food and Drug Administration is now encouraging the development of new methods or technologies. Many other established sterilisation methods use glutaraldehyde that is not only harmful to the environment but also tends to be regulated by strict usage and disposal rules such as COSSH guidelines.

Focus on Recycling

The outlook on recycling is changing significantly thanks to new research and technologies enabling, for example, monomer extraction. Recycled polymers can be broken down to their constituent monomers promoting an almost limitless recyclability of some polymers. In addition to this, Polyvinyl chloride (PVC), renewable polyethylene and polyethylene terephthalate (PET) can be recycled several times without losing critical properties.

Reducing the impact of packaging can also significantly reduce the materials that need to be dealt with through either waste or recycling. Packaging manufacturers are decreasing packaging volume by favouring sealed trays instead of pouches, laser-etching instructions directly on to the tray where regulation permits it, or reducing the number of components required overall. In addition to this, for recycling plans to be successful it important to have a full understanding of the practices surrounding device use and to establish, where possible,  closed loop recycling systems that recover the waste materials from hospitals or patients and bring them back into the recycling process.

Sustainable Manufacturing: Technology and Research

Greater employment of fast degrading plastics or material from other sources is a key strategy to reduce harmful pollutants both at production and disposal stage. Bio-based materials can in fact offset the carbon emitted during processing as the monomer source grows, and a growing range of sources for bio based monomers -such as wood pulp or sugar cane- is available. However, when assessing the most suitable material for a part, the entire lifecycle of the product needs to be considered. For example: bio-degradable polymers can contaminate a recycling stream and emit methane when incinerated.

The use of environmentally friendly materials should also be supported by an increase in clean renewable energy sources. Lower energy consumption means fewer carbon emissions but also financial savings, making this an appealing measure for manufacturers. New technologies are proving a major gamechanger on this front, helping manufacturers marry their environmental stewardship with cost savings and efficiency.  3D printing, for example, can help develop optimum product moulds more quickly, refining production parameters to minimise raw materials volumes and maximising output productivity.

Similarly, ‘digital twin’ production software uses inline sensors to create a virtual, real-time mirror of the production environment to enable inline refinements. The objective is to achieve “zero defect”, waste-free manufacturing. In addition to this, LEAN manufacturing methodologies are already helping to optimise inventory management and reduce overproduction. 

Sustainability by Design

It is increasingly clear that effective environmental sustainability in the medical device sector cannot exist without a full view of the product life cycle from concept development, material selection, design and engineering to manufacturing, packaging, transportation, sales, use, and end-of-life disposal. These evaluations are typically made for factors such as manufacturing efficiency, time to market, or safety and regulatory compliance, packaging and transportation costs, but should be extended to energy efficiency and environmental impact by means such as life cycle analysis.  

In addition to this, with devices rapidly becoming more digitally connected, developers need to be aware that the costs of disposable electronics would simply not be viable, or indeed acceptable in the light of electronics disposal regulations. Design therefore should focus on creating a simple, repeatable interface between the two component sections so as not to impair the functionality or efficacy. As reducing waste and harmful emissions continues to exert businesses and governments globally, the medical devices industry cannot stand by. The environmental but also commercial implications of inaction are too serious and the array of solutions now available is exciting and diverse.

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