University sues for control of Tenet hospital

The move is but one of many woes affecting the for-profit company.

By Katherine Vogt — Posted Sept. 18, 2006

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The University of Southern California has sued Tenet Healthcare Corp. to oust it as operator of a Los Angeles hospital.

The lawsuit, filed Aug. 22 in Superior Court in Los Angeles, seeks to obtain a declaration that Tenet's lease agreement to operate USC University Hospital has been voided. USC would then buy the 269-bed academic medical center, which was built on land owned by the university.

The complaint cites several examples of Tenet's woes over the last four years, including investigations of its Medicare billing policies by several federal agencies and lawsuits and criminal investigations alleging that unnecessary heart procedures were performed at one Tenet hospital and that kickbacks were paid to physicians for referrals at another. These have led to settlements totaling hundreds of millions of dollars, though Tenet has not admitted wrongdoing.

USC attorney Jonathan Gluck said the disputes, litigation and settlements have "substantially impacted their ability to operate the hospital."

"The problem is that Tenet has been suffering for years. You don't recover in a day or even in a year, and the hospital is too important to just allow it to wallow in Tenet's problems until Tenet figures out what it is going to do," Gluck said.

Tenet officials said in a written statement it was disappointed that problems with the 20-year-old relationship couldn't be worked out collaboratively, outside of a lawsuit and "high-profile publicity campaign."

Tenet noted that it has invested $229 million in the USC health sciences campus in the last five years, including a $150 million new patient tower scheduled to open early next year.

Meanwhile, Tenet is losing its lease on two Dallas hospitals operated by Metrocrest Hospital Authority. The authority announced on Aug. 25 that it had reached an agreement to have Charlotte, N.C.-based Hospital Partners of America manage Trinity Medical Center and RHD Memorial Medical Center.

Tenet's 25-year lease on the facilities was due to expire next year. Tenet spokesman Steve Campanini said the action was nothing more than a sign of changing times. "The health care environment continues to evolve, and they selected a different operator."

After those leases are terminated, and Tenet completes several previously announced divestitures, the Dallas-based company will operate 55 hospitals. As recently as two years ago, Tenet operated 96.

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