HCA is large enough to buy Tenet Healthcare. But antitrust regulators are likely to cast a wary eye toward HCA combining its 14 hospitals in South Florida with Tenet's 10 hospitals there.
Tenet's share rose sharply in after-hours trading Wednesday amid reports that the hospital chain is exploring a possible sale of the company.
Hospital stocks were pressured Wednesday by the potential impacts of fast-moving Hurricane Irma and Senate legislation to replace Obamacare.
Outgoing Tenet Healthcare CEO Trevor Fetter said investors should debate whether to break up Tenet around its three main business lines—hospitals, ambulatory surgery centers and revenue-cycle software—or leave the company whole.
The outsized $15 billion of debt that Tenet Healthcare Corp. now carries makes it prohibitively expensive to be bought outright.
Tenet Healthcare's embattled CEO, Trevor Fetter, is stepping down in March or when a successor is appointed. The health system also adopted a poison pill defense to ward off an unwanted change of ownership.
Activist investors have taken off the gloves as turnarounds have plodded along at Community Health Systems and Tenet Healthcare.
Tenet Healthcare Corp. now has two activist shareholders with sizable stakes in its business. Boston-based Camber Capital has purchased 5.7% of Tenet's shares, and the hedge fund has a CEO with an activist history.
Glenview Capital Management could soon acquire a larger stake in Tenet and push for change as an activist shareholder, as it has vowed to do. The hedge fund said it could drive change more efficiently outside of Tenet than inside the boardroom.
Chinese billionaire Tianqiao Chen as recently as February used his 10% stake in Legg Mason to gain two board seats at the asset-management firm, including the vice chairmanship for himself. His designs for CHS haven't been made public but he already carries weight with his holdings.
Patients avoiding elective surgeries and other procedures because of skyrocketing out-of-pocket costs were cited by hospital chains as a primary cause of softening hospital volumes in the second quarter.
Tenet, the nation's third-largest investor-owned hospital chain, saw its adjusted admissions decline 1.4% compared with the year before.