Business
Tenet expects at best to break even this year
■ The for-profit hospital chain is still wincing from legal and financial woes.
By Katherine Vogt — Posted Jan. 3, 2005
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Tenet Healthcare Corp. has warned investors that it won't likely do better than break even in 2005, a sign that the for-profit hospital chain is still feeling the effects of a series of legal and financial troubles that spawned a major restructuring effort and management overhaul.
In a statement released Dec. 13, 2004, Tenet said that it did not expect results from continuing operations to exceed break-even in 2005 even though several cost-cutting measures will be phased in throughout the year.
The company also said that it expected to post a loss in the fourth quarter partly due to charges that could total more than $1 billion. Tenet posted a net loss of $70 million in the third quarter, which ended Sept. 30.
In a conference call with investors on Dec. 15, Tenet Chief Executive Trevor Fetter said the company had worked hard to improve itself in the wake of several major setbacks, including a failed pricing strategy, a settlement over alleged unnecessary cardiac procedures at a hospital in Redding, Calif., and a government investigation of its outlier payments.
"No company in this industry had ever faced these kinds of issues, so there was no clear roadmap for undoing the damage. The two years since then have been very difficult for the company," Fetter said.
"As a team, we've already made tremendous progress. Unfortunately, all of our progress has been offset from adverse changes in volumes, pricing and bad debt expense."
Tenet has made several significant changes in the wake of its problems, including a management overhaul that replaced several top executives and board members. It also launched two major divestiture initiatives to reduce its catalog of hospitals by nearly 40% so it can focus on a core group of 69 facilities.
Fetter said Tenet is building a solid foundation for the future. But, he said, "we're fighting some strong headwinds as we work to return to an acceptable level of profitability."
Tenet, which had been based in Santa Barbara, Calif., also said it was officially transferring its headquarters to Dallas on Jan. 3. The intention to move was announced last summer.