Tenet Healthcare Reports $195 Million Loss in Second Quarter
California-based Tenet Healthcare, the second-largest for-profit hospital chain in the nation, yesterday reported a second-quarter loss of $195 million, or 42 cents per share, compared with earnings of $242 million, or 48 cents per share, a year earlier, the Wall Street Journal reports. The loss resulted in part from $322 million in charges that reduced per-share earnings by 69 cents; the charges included $124 million for asset impairment, $48 million for restructuring, $45 million for litigation and investigations, $35 million in other charges and $70 million for a disputed income tax deduction that Tenet plans to appeal. The charges also included a $54 million settlement announced Wednesday with the U.S. attorney's office that resolves allegations that two physicians at Tenet-owned Redding Medical Center in California performed unnecessary cardiac surgeries (Rundle, Wall Street Journal, 8/8). Tenet would have posted second-quarter earnings of $127 million, or 27 cents per share, without the charges. Tenet reported that second-quarter revenue decreased 1.5% to $3.38 billion from $3.42 billion a year earlier, in large part because of a revision in the practices that the company uses to bill Medicare for "outlier" payments; such payments decreased to $16 million in the second quarter from $223 million a year earlier. Second-quarter admissions at hospitals that Tenet owned for at least one year increased 3% from a year earlier (Vrana, Los Angeles Times, 8/8). However, second-quarter outpatient visits at the hospitals decreased by 0.7% from a year earlier (Snider, Bloomberg/Philadelphia Inquirer, 8/8).
Tenet officials said that company in the second quarter spent $2 million to $3 million per month for legal fees and other costs related to investigations and lawsuits, the AP/Lexington Herald-Leader reports (Gentile, AP/Lexington Herald-Leader, 8/8). "When we have opportunities to settle matters on a fair basis, we will settle. Where we need to litigate, we'll litigate," Trevor Fetter, acting CEO of Tenet, said (Bloomberg/Philadelphia Inquirer, 8/8). On July 17, a federal grand jury issued a 17-count criminal indictment of San Diego-based Alvarado Hospital Medical Center, hospital CEO Barry Weinbaum and Alvarado owner Tenet HealthSystem Hospitals. Earlier in July, the U.S. Attorney's Office in Los Angeles issued subpoenas to Tenet for records related to physician-relocation agreements since 1995 at seven Southern California hospitals. In addition, the Securities and Exchange Commission, the HHS Office of Inspector General and the Federal Trade Commission have launched investigations into Tenet since October 2002 (California Healthline, 8/7). Fetter said, "While we continue to face revenue pressures in the near term, as well as rising cost pressures, we are aggressively moving to reduce costs and bring them in line with our current revenue stream" (Wall Street Journal, 8/8).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.