Tenet Sees 30% Q3 Profit Rise
Tenet Healthcare Group, the nation's second-largest hospital chain with 110 hospitals, reported "strong financial gains" yesterday, with income from operations up 30% to $198 million in its third fiscal quarter, the Los Angeles Times reports (Hirsch, Los Angeles Times, 4/5). Revenue rose 6.5% to $3 billion as the company posted a net income of $198 million, or 60 cents per share(Bloomberg/Philadelphia Inquirer, 4/5). Tenet "appeared to benefit" from the aging baby boomer population, as patients between the ages of 41 and 50 and 51 and 60 were the chain's "two strongest growing groups" of admissions. In addition, increases in MCO contracts and Medicare payments contributed to what Tenet chair and CEO Jeffrey Barbakow called "splendid" quarterly results. With its "strong cash flow," Tenet was able to "slash" debt by $188 million in the quarter. The company's total debt dropped to less than $4.9 billion, down more than $1 billion from a year ago (Los Angeles Times, 4/5). In addition, labor, supply and "bad-debt expenses" dropped as a percentage of revenue(Bloomberg/Philadelphia Inquirer, 4/5). Now, Tenet is "watching" MCO negotiations with CalPERS -- the California Public Employee Retirement System and the nation's second-largest health insurance purchaser -- over 2002 premium increases, as CalPERS pricing "sets the bar" for how high premiums can rise in a given year. Tenet COO Thomas Mackey said that the expected premium increase "bodes well for continued strong managed care and hospital premium increases" (Los Angeles Times, 4/5). Kemp Dolliver, an analyst at SG Cowen Securities said, "The price increase is key. If prices weren't going up, the [hospital] industry would have some real problems" (Bloomberg/Philadelphia Inquirer, 4/5). Barbakow added, "Opportunities are definitely picking up, particularly for hospitals that have had some kind of operating or financial problems" (Porter, Wall Street Journal, 4/5).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.