Healthcare Business News
Trevor Fetter, Tenet Healthcare Corp.

Tenet CEO Fetter banks on success of insurance exchanges, reform

By Beth Kutscher
Posted: January 13, 2014 - 6:30 pm ET

Despite the generally disappointing rollout of the new insurance marketplaces, Tenet Healthcare Corp. President and CEO Trevor Fetter still views the insurance exchanges as a business opportunity.

“Tenet is a different company within the provider sector,” Fetter said Monday morning at the JPMorgan Healthcare Conference in San Francisco.

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The Dallas-based company recognized the opportunities under healthcare reform “earlier than most,” Fetter said, and believed from the beginning that reimbursement from exchange plans would be closer to traditional commercial rates than to the lower rates paid by Medicare and Medicaid.

All of Tenet's hospitals are now participating in at least one plan at every level of the exchanges, and 97% are in at least one of two lowest-cost “silver” plans, which Fetter called the “sweet spot” in terms of coverage and affordability.

In addition, 330 people at Conifer Health Solutions, its revenue-cycle management arm, have been trained as certified application counselors, and have enrolled 250,000 people in a health plan, about half of whom were Tenet patients.

Tenet has incurred an annual $800 million expense caring for uninsured patients—which it expects to be significantly reduced under healthcare reform.

Fetter said the trend in California—one of a few states that have seen early success with exchange enrollments, and where Tenet operates 11 hospitals—has been “much more positive” than even the introduction of healthcare reform in the early days of the insurance reform initiative in Massachusetts that was a template for the federal law.

In another move intended to capitalize on the changing business climate under the Affordable Care Act, Tenet committed $1.8 billion to acquire Vanguard Health Systems last year. That smaller hospital chain's expertise in operating health plans and managing risk-based contracts was no small part of the strategic rationale. Tenet now has 4 million lives covered under value-based contracts, Fetter said.

Fetter also disclosed that Tenet will report a 2.3% decline in same-hospital admissions when it reports earnings results on Feb, 24, but he said the trend has “improved sequentially,” quarter-over-quarter.

In addition to Tenet's core hospital operations, Tenet is on track to realize more than $1 billion in revenue in 2014 from Conifer's current contracts, Fetter said.

Follow Beth Kutscher on Twitter: @MHbkutscher

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