Healthcare Business News

Tenet cites good news under net loss

By Beth Kutscher
Posted: May 5, 2014 - 7:15 pm ET

Tenet Healthcare Corp. posted another net loss to start the year as the company faced declines in state and federal reimbursement, weaker patient volume and the loss of a health plan contract in Arizona.

The results included Tenet's acquisition of Vanguard Health Systems, which closed in October.

The earnings hit came despite a number of positive signs, such as an increase in patients with commercial insurance and what the Dallas-based chain described as the best quarterly same-hospital performance in more than six years.

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Same-hospital outpatient visits increased 2.5% even as inpatient visits declined 1.2%. Same-hospital surgeries increased 13.1% and emergency department visits grew 2.7%.

In addition, the chain saw a 17% increase in Medicaid admissions in its four states that expanded Medicaid eligibility for low-income adults. As a result, Tenet's uninsured and charity-care admissions declined by a third in those states.

The company also said the number of patients with insurance purchased from an exchange is growing month over month, a trend that continued into the second quarter.

In total, revenue increased 1% to $3.9 billion, with most of the growth coming from better terms on its commercial managed-care contracts, more outpatient visits and more business for Conifer Health Solutions, its revenue-cycle management arm.

However, Medicare sequestration took out about $25 million from its adjusted earnings before interest, taxes, depreciation and amortization, the company said. Revenue also declined $75 million in Arizona after the state significantly downsized its Medicaid managed-care contract with the company.

Tenet also attributed weaker patient volume to the controversial two-midnight rule, which depressed Medicare and Medicaid one-day stays, and to severe winter weather.

The company also said it incurred an additional interest expense related to financing the $4.6 billion Vanguard acquisition and $400 million in share repurchases last year.

The $32 million net loss for the quarter compares with a net loss of $88 million during the first quarter of 2013.

Follow Beth Kutscher on Twitter: @MHbkutscher

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