The nation's second-largest investor-owned chain is boosting its strength in operating academic medical centers with a new agreement that will convert two of its New Orleans hospitals to teaching hospitals.
After nearly a year of discussions, Tenet Healthcare Corp. signed an affiliation agreement with Louisiana State University's medical school, which traditionally has used the state's charity hospital system for training its students. Under the agreement, two Tenet hospitals-Mercy Baptist Medical Center and Kenner (La.) Regional Medical Center-will become teaching sites.
Robert Marier, M.D., acting dean of LSU's medical school, said the agreement won't impair the school's commitment to Medical Center of Louisiana-University Hospital Campus, which is owned by the state's charity hospital system. "This does not undermine our commitment to support the public hospitals," he said, but noted a declining patient base at the state's nine-hospital system.
A financial linchpin to the deal is Tenet's agreement to finance the planned $25 million Stanley S. Scott Cancer Center on LSU's campus. The center is expected to be the only cancer center in Louisiana to be designated by the National Cancer Institute, and the institute has provided a $691,000 planning grant to develop it. Scott, who died of lung cancer, was an African-American journalist who received the Pulitzer Prize for his coverage of the assassination of Malcolm X. The center would be the only healthcare facility in the state named after an African-American, officials said.
The strength of the teaching affiliation is second only to the company's operation of the University of Southern California University Hospital in Los Angeles. Tenet built that hospital for USC in 1991.
In other developments last week, Tenet reported fourth-quarter and year-end earnings.
Although operating income and margins increased, one-time charges contributed to a net loss for the fourth quarter ended May 31. The charges included $85.9 million for a change in accounting methods and $25.5 million to fight continued legal battles stemming from its divested psychiatric hospitals.
The Santa Barbara, Calif.-based hospital chain reported a net loss of $21.7 million, or 10 cents per share, for the quarter, compared with net income of $5.9 million, or 3 cents per share, in the year-ago quarter. Revenues grew 8.5% to $1.5 billion.
The change in accounting methods affects depreciation costs on three rehabilitation hospitals, four general hospitals and one parcel of undeveloped land.
For the fiscal year, the 75-hospital chain reported a 112% increase in net income to $350.1 million, or $1.63 per share, compared with $165 million, or 91 cents per share, in the previous year. Revenues grew 67.5% to $5.6 billion. The increase reflects Tenet's acquisition of American Medical International during its 1995 fourth quarter.
Jeffrey Barbakow, the company's chairman and chief executive officer, told stock analysts last week that the year-end results reflect continuing progress for the company. "Three years ago, this company was dead in the water and sinking," he said. However, the company is reducing its debt, which totals $3.1 billion, and acquiring additional hospitals.