Tenet To Release ‘Stronger-Than-Expected’ First-Quarter Earnings Estimates
Officials at Santa Barbara-based Tenet Healthcare, the nation's second-largest for-profit hospital chain and a "bellwether of sorts" for the health care industry, yesterday said that the company will report "stronger-than-expected" earnings for the first quarter, which ended Aug. 31, the Los Angeles Times reports. Tenet estimates first-quarter earnings of 68 cents per share -- five cents more than analysts had predicted and a 39% increase from a year earlier. Tenet attributed the increase to "strong revenue growth, driven largely by rising demand for more sophisticated and costly hospital services," and reduced costs (Lee, Los Angeles Times, 9/24). Patient admissions at Tenet hospitals increased 4.1% in the first quarter, according to company officials (Snider, Bloomberg/Ventura County Star, 9/24). Analysts also attributed Tenet's increased earnings estimate to the "strengthened hand of major hospital companies" in negotiations with health insurers and considered the announcement Monday a "sign of continued strength" for the health care industry. Clifford Hewitt, an analyst at Legg Mason in Baltimore, said that large hospital chains have received an average 6% to 8% increase in reimbursements from health insurers in the past few years, and with a 2.7% increase in Medicare reimbursements this year, "they continue to be in a good pricing environment and see solid growth in utilization." Some analysts have raised concerns that increased health care costs would lead to a "backlash" against large hospital chains, but most "don't see any immediate financial impact" on companies such as Tenet, the Times reports. Tenet will release first-quarter financial results on Oct. 2 (Los Angeles Times, 9/24).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.