TENET: Wall Street Unfazed by Third Quarter Loss
Tenet Healthcare Corp. posted a 16% drop in its fiscal year third-quarter profits, but following reassurances that it is improving operations, the company's stock rose 21%. The Philadelphia Inquirer reports that Tenet's third quarter revenues rose 10% to $2.82 billion, but the net income on those revenues fell to just $124 million, or 40 cents a share. In a conference call yesterday with analysts and investors, Tenet Chair and CEO Jeffrey Barbakow blamed the "difficult quarter" on "margin pressure from Medicare cuts, high bad-debt expense," low patient admissions and "short-term dilution from our Philadelphia acquisition." Tenet executives said the eight Philly-area hospitals acquired from the Allegheny Health Education and Research Foundation (AHERF) "appear to have 'turned the corner' financially but still dragged down overall earnings by 2 cents a share" (Gerlin, 4/9). "We're starting to get a handle on these things. We're starting to see improvements in all the areas that created softness," said Tenet Vice President Paul Russell. The Santa Barbara, CA-based hospital chain "reduced the medical and surgical supply budget" by 21% for the Philly hospitals and also improved admissions there. Tenet officials said they expected lower reductions in Medicare reimbursements next year. Nevertheless, the 40-cents-a-share drop was in opposition to the 43-cent gain First Call Corp. predicted (Bloomberg News/New York Times, 4/9).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.