Troubles grow as Tenet ends 2004 with $2 billion quarterly loss

Tenet Healthcare Corp. announced a $2 billion loss for the fourth quarter of 2004, as developments with its legal woes kept the troubled hospital chain in the public spotlight.

The Dallas-based company said it suffered in the fourth quarter from decreases in patient volumes and several hefty charges, including a $1.1 billion asset writedown. The total loss for the three months that ended Dec. 31 compared with a loss of $954 million for the same period a year earlier. For the full year 2004, Tenet posted a $2.6 billion loss, or $5.66 per share.

Tenet also said its fourth-quarter revenue fell because of its Compact with the Uninsured program, which provides discounts to uninsured patients. Total operating revenue for the period was $2.41 billion, down from $2.46 billion a year earlier.

The program for the uninsured may be bolstered under a proposed legal settlement that was announced March 10 and aims to resolve several class-action lawsuits that challenged how the for-profit hospital chain charges patients who have little or no insurance.

Under the agreement, Tenet, which did not admit liability, would adopt policies affecting the uninsured, including discounts, reasonable payment schedules and financial counseling. Tenet would also provide reimbursements to uninsured patients who paid more than a certain percentage of hospital gross charges between June 15, 1999, and Dec. 31, 2004.

The settlement, which was subject to court approval, could resolve class-action lawsuits pending in nine states. Tenet did not disclose how much it expected to pay if the agreement was approved.

Meanwhile, a federal judge in San Diego ruled that a case can go forward against a Tenet hospital accused of paying illegal kickbacks to physicians. Tenet officials said the ruling dismissed two counts in the case involving Alvarado Hospital Medical Center but rejected an effort to throw out 18 others.

Prosecutors have alleged that Alvarado and another Tenet subsidiary paid more than $10 million to fund physician relocation agreements between 1992 and 2002. They claimed a "substantial portion" of the money went to established doctors to induce them to make referrals to Alvarado.

A mistrial was declared in the original case on Feb. 17 after jurors were unable to reach a verdict following nearly four months of testimony. A retrial had been set for March but was pushed back until at least early May.

In other developments, Boca Raton Community Hospital in Florida filed a lawsuit against Tenet on March 2, the same day the Florida attorney general and 13 hospitals sued the company for allegedly overbilling Medicare by more than $1 billion. According to published reports, Boca Raton's lawsuit mirrors the other and seeks to represent 4,000 acute care hospitals nationwide.

Tenet officials say that the allegations in all the hospitals' lawsuits are unwarranted.