Tenet Says Profit More Than Doubled in First Fiscal Quarter, Raises Earnings Estimate
Net income for Santa Barbara-based Tenet Healthcare more than doubled in the fiscal quarter ending Aug. 31, the Los Angeles Times reports (Lee, Los Angeles Times, 10/3). For the quarter, Tenet posted a profit of $338 million, or 68 cents a share, up from $155 million, or 31 cents a share, a year earlier. Revenue increased 12% to $3.7 billion , up from $3.3 billion a year earlier (Dow Jones/AP/Ventura County Star, 10/3). Tenet officials said that increased profits in the last quarter are because of growth in admissions, improved debt collection and higher payments from insurers. Further, the company generates much of its revenue through its concentration on treating patients who are older and those with acute conditions (Los Angeles Times, 10/3). Treating acute conditions, such as cardiology, is "more profitable" than providing other services, Bloomberg/Kansas City Star reports (Bloomberg/Kansas City Star, 10/3). Tenet has reported eight straight quarters of growth of 25% or more; based on that, the company estimates profit for 2002-2003 fiscal year will increase by at least 25%. According to analysts, this projection is "realistic, but perhaps a little conservative," the Times reports (Los Angeles Times, 10/3).
Tenet intends to reinvest $1 billion into its hospitals this year, an increase of 66% from two years earlier (Dow Jones/AP/Ventura County Star, 10/3). Much of the $1 billion will go toward specialties such as cardiology, according to the Times. According to Robert Mains, a health-care analyst for Advest Inc., "Tenet and other publicly traded hospitals now have an advantage. Most of their competitors are not-for-profit hospitals, and many of them are struggling and do not have the cash or access to capital to invest and grow." Jeffery Barbakow, chair and chief executive at Tenet, said the company's biggest concern is labor, noting that California's new nurse-to-patient ratio requirements could exacerbate a nursing shortage (Los Angeles Times, 10/3). The new rules, expected to be implemented in July 2003, call for one nurse to every six patients on general medical floors, a ratio that would be narrowed to 1-to-5 18 months after implementation. The rules would also set a 1-to-1 ratio for nurses and patients in trauma centers, a 1-to-4 ratio for pediatric nurses and child patients and a 1-to-2 ratio for obstetric nurses and women in labor (California Healthline, 1/23).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.