Tenet Healthcare Posts Largest-Ever Operating Earnings
Santa Barbara-based Tenet Healthcare Corp., the nation's second-largest for-profit hospital chain and one of the "most powerful players in the health-care industry," reported its "strongest quarterly operating earnings growth ever," with an operating profit increase of 47% for the second fiscal quarter, which ended Nov. 30, the Los Angeles Times reports. Tenet's profit from operations rose to $258 million, up from $175 million one year earlier, and revenue increased 16% to $3.39 billion as a result of greater patient load and higher prices. Those "major" price increases have "restor[ed] a once-beleaguered business to profitability while fueling a new round of double-digit growth" in overall health-care costs for consumers and insurers, the Times reports. Tenet, which owns 116 hospitals in 17 states, has "shed" low-paying HMOs and has refused capitated payments. "Those payments in the 1990s were supposed to be the wave of the future, but they proved to be a dismal failure. We still have contracts with most major HMOs, but we now get paid a negotiated rate for all medical services provided," Harry Anderson, Tenet's vice president for communications, said. Peter Boland, an independent consultant, said that the company has been able to make changes and better monitor costs through new technology. Tenet has also "shed" several hospitals that were outdated, were not performing up to standard or were in areas where the company lacked market-share strength, and the company has focused on providing services for aging baby boomers. "Tenet has moved very aggressively in a band that runs across Southern California, Texas, Louisiana and South Florida, where there is a lot of population growth and aging baby boomers. That's the driver of their volume growth and their continued move from sub-acute to more expensive acute care," Charles Lynch, an analyst with CIBC World Markets, said (White, Los Angeles Times, 1/5).
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