Tenet Names New Chief Operating Officer
Less than two weeks after announcing plans to sell more than one-quarter of its hospitals, Santa Barbara-based Tenet Healthcare on Monday named Reynold Jennings the company's new chief operating officer, effective immediately, the Los Angeles Times reports (Girion, Los Angeles Times, 2/10). In January, Tenet, the nation's second-largest for-profit hospital chain, announced plans to sell 27 of its 100 hospitals. The company began downsizing last year when it announced plans to sell or divest 14 facilities as part of an ongoing cost-cutting effort. However, unlike last year's sales, which focused largely on noncore markets, the hospitals in the upcoming sales will include several in larger markets, including 19 in California. Of those 19, all but one are located in Los Angeles or Orange counties (California Healthline, 2/5). The COO post had been vacant since November 2002, when Thomas Mackey retired "under pressure" shortly after the "first of a series of revelations that triggered numerous continuing government investigations and toppled the management team" at Tenet, the Wall Street Journal reports (Wall Street Journal, 2/10). With the appointment of Jennings, Tenet has "completely remade its top executive wing," the Dallas Morning News reports. Since November 2002, the company has named a new CEO, chief financial officer and general counsel, as well as a non-executive chair (Yu, Dallas Morning News, 2/9). Jennings, 57, was president of Tenet's eastern division, which includes some of the company's "strongest financial performers," the Times reports. Tenet CEO Trevor Fetter said that Jennings "can hit the ground running" and has "a tremendous amount of experience in this business" and "an impeccable track record of success in turnarounds."
In related news, a dissident Tenet shareholders group on Monday issued a report, called "Tenet's Death Rattle," questioning Tenet's ability to successfully turn itself around. In a statement issued with the report, M. Lee Pearce, chair of the Tenet Shareholders Committee, said that "we do not see how Tenet can survive as it is currently structured" because of its "rapidly deteriorating cash position and potential multibillion [dollar] liabilities." Pearce continued, "The more likely outcome is a reorganization of Tenet into several separate regional companies, perhaps as many as four." The report also said that operations at the for-sale hospitals will "deteriorate very rapidly, potentially sucking hundreds of millions of dollars in cash" (Los Angeles Times, 2/10). Fetter said that the Tenet Shareholders Committee is a "one-man operation" and that the opinions of the group are "not certainly shared broadly by analysts and shareholders" (Dallas Morning News, 2/9). Fetter said that breaking up the company makes no sense because there "are economies of scale that are well understood in this industry," adding, "I disagree with [Pearce's] statements on liquidity, liabilities and cash flow" (Los Angeles Times, 2/10).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.