Tenet Healthcare Officials Expect Larger Loss for Fourth Quarter
Officials for California-based Tenet Healthcare on Monday said that fourth-quarter charges could exceed $1 billion and that the company would report a larger loss for the fourth quarter than it reported for the third quarter, the Los Angeles Times reports. Tenet officials also said that the company would do no better than break even in 2005 (White, Los Angeles Times, 12/14).
According to Thomson Financial Network, analysts had estimated that Tenet would report a loss of 4 cents per share for the fourth quarter and earnings of 11 cents per share for fiscal year 2005, the Dallas Morning News reports (Quinn, Dallas Morning News, 12/14).
Tenet, which will move its headquarters from Santa Barbara, Calif., to Dallas in January, will begin "a number of significant additional cost-reduction initiatives," including measures to reverse low admissions and unpaid patient bills, but officials gave no details, according to the Times. Analysts said to remain viable, the company must clear up a number of legal investigations (Los Angeles Times, 12/14).
Federal prosecutors in several areas nationwide have launched investigations into physician-relocation agreements at Tenet hospitals (California Healthline, 8/9).
In October, a criminal trial of Tenet HealthSystem Hospitals, a Tenet Healthcare subsidiary, began in which federal prosecutors allege that the company and two administrators at Alvarado Hospital Medical Center paid illegal kickbacks to doctor groups to boost patient referrals and revenue. Federal prosecutors also have claimed that Alvarado and other Tenet hospitals have offered physician-relocation agreements in exchange for patient referrals (California Healthline, 10/27).
To reduce the company's size by about a 25%, Tenet has sold or has agreed to sell all but 5 of the 27 hospitals it put up for sale this year (Bloomberg/New York Times, 12/14). Peter Young, a consultant for HealthCare Strategic Issues, said the company likely will divest more of its remaining 69 facilities in 2005, according to the Morning News.
Tenet officials said they will discuss projected losses and outline the forecast for next year at an analyst meeting on Wednesday in Dallas (Dallas Morning News, 12/14).
"We have made significant progress toward resolving the numerous problems that Tenet has faced over the past two years," CEO Trevor Fetter said in a statement, adding, "This has been more difficult and is taking longer than anyone could have anticipated."
Sheryl Skolnick, an analyst with Fulcrum Global Partners, said the company's "underlying fundamentals will continue to deteriorate until they resolve some important matters" (Los Angeles Times, 12/14). Skolnick added, "Lower volumes and higher bad debt are significant industrywide issues that make it very difficult for a company that's behind the eight ball like Tenet is to turn around" (Bloomberg/New York Times, 12/14).