Tenet Healthcare Second-Quarter Earnings Will Not Meet Estimates From Analysts
Officials from Santa Barbara-based Tenet Healthcare, the nation's second-largest for-profit hospital chain, yesterday announced that the company's second-quarter earnings would be "significantly below" analysts' predictions of 34 cents per share and that the hospital chain faces a "very challenging transitional period" through fiscal year 2003, the Wall Street Journal reports. The company said profit for the third and fourth quarters of FY 2003 is expected to be between 40 cents per share and 50 cents per share, well below of the 70 cents per share analysts predicted on average, the Journal reports. For all of FY 2003, the company expects to report a profit of between 80 cents and $1 per share. Admissions at Tenet hospitals were up 2% in the first two months of the second quarter, but revenue per admission systemwide fell 6.6%. Based on those rates, Tenet officials expect operating revenue for FY 2003 will be between $13.6 billion and $13.9 billion. Meanwhile, company officials expect costs, particularly salaries and benefits, will rise beyond the 42% of revenue they consumed in the first quarter. "We are dealing with both industry issues and company-specific issues, most importantly past pricing practices that have placed the company in an especially difficult position," Trevor Fetter, president and acting CEO of Tenet, said. According to the Journal, Tenet has "struggled to recover" from several investigations into improper procedures (Bennett/Goff, Wall Street Journal, 6/24). The company is currently facing a Department of Justice investigation into billing practices related to Medicare outlier payments and allegations that two doctors at a Tenet hospital in Redding performed unnecessary surgeries. In addition, the DOJ in January filed suit alleging Tenet collected an additional $115 million in revenue between 1992 and 1998 by falsifying diagnosis codes on Medicare claims in order to receive higher Medicare reimbursements, a process know as "upcoding" (California Healthline, 6/11). After the announcement, Tenet's stock fell 26% to a 52-week low of $12.01 per share (White, Washington Post, 6/24).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.