Platform investment: Vanguard Health Systems
Overview
Metalmark Capital, former OrNda HealthCorp CEO Charles Martin and his team of former executives from OrNda and Columbia/HCA formed Vanguard Health Systems, Inc. ("Vanguard") in July 1997 to acquire and convert primarily not-for-profit healthcare systems into investor-owned entities.
The opportunity
Partnership with a leading management team:
With our experience in building companies from early stages of development and our reputation as a committed, patient and collaborative financial partner, in 1997 we were able to attract one of the leading teams in the hospital management sector: Charles Martin and his team had grown OrNda from 11 hospitals and revenue of $460 million in 1992 to 53 hospitals and pro forma revenue of $3.0 billion at the time of its sale to Tenet in January 1997 for $3.3 billion.

Significant expansion opportunity:
Together with management, we recognized the opportunity to generate favorable returns. First, the hospital sector, which experiences cyclical weakness, often presents experienced hospital management teams with opportunities to acquire assets at attractive valuations. Second, once acquired, Vanguard's exceptional management skills allowed them to begin the process of converting under-managed, not-for-profit facilities into efficient, for-profit facilities. By working in partnership with experienced management teams such as Vanguard's, the medical staffs of these facilities have been able to expand the breadth and depth of their service offerings, thereby increasing their competitive position in their markets.

Our approach
Vanguard owned no assets when founded in 1997. Over the course of the next seven years, we worked with management to evaluate scores of them, resulting in the acquisition of fifteen hospitals in four metropolitan markets (Phoenix; Chicago; Orange County, California; and San Antonio) as well as the construction of a greenfield hospital in Phoenix.
Results
During the time that we were actively partnered with the company, Vanguard grew to become the sixth largest for-profit acute care hospital management company in the United States, with $1.8 billion in annual net revenue.

In September 2004, we consummated a transaction in which Blackstone Capital Partners IV purchased a majority equity interest in Vanguard.

In October 2013, Tenet Healthcare Corporation (NYSE:THC) acquired the Company.

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Since partnering with Vanguard, the company has grown to become one of the largest for-profit acute care hospital management companies in the United States.