Tenet Healthcare Likely To Post Lower-Than-Expected Earnings in Next Four Quarters, Company Officials Say
Officials from Santa Barbara-based Tenet Healthcare, the nation's second-largest for-profit hospital chain, on Wednesday said that earnings over the next four quarters will be "significantly below" analysts' expectations, largely because of an increase in the number of uncollected bills, the Wall Street Journal reports. Analysts' average estimate for Tenet's third-quarter earnings was 20 cents per share, according to Thomson First Call (Rundle, Wall Street Journal, 10/23). Tenet officials said they do not expect to reach their earlier estimates of between 40 cents and 50 cents per share in the second half of 2003, or their predictions of 80 cents to $1 per share for the fiscal year ending in June 2004, the AP/Philadelphia Inquirer reports (AP/Philadelphia Inquirer, 10/23). Tenet officials said they would not issue new earnings expectations because of an uncertain financial outlook, the Los Angeles Times reports (White, Los Angeles Times, 10/23). Officials said the company's bad-debt expense for the quarter will be between $500 million and $550 million, which is between 15% and 17% of projected revenue and nearly twice the $260 million it had budgeted for uncollected accounts. Tenet officials attributed the increased bad-debt of increased demand for hospital care by uninsured patients and industrywide changes that require patients to pay more out-of-pocket for care (Wall Street Journal, 10/23). The Times reports the decreased earnings also could be attributed to federal investigations and private lawsuits over Tenet's former billing practices. As a result of the investigation and a lawsuit settlement, Tenet voluntarily halted collecting Medicare outlier payments for unusually costly procedures and backed away from aggressive strategies to collect debts from uninsured patients, the Times reports (Los Angeles Times, 10/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.