Tenet Healthcare Corp., the nation's second-largest for-profit hospital chain, last week announced plans for more corporate divisions to oversee fewer hospitals.
Tenet hospitals will be reconfigured into three divisions with 30 to 40 hospitals apiece. Previously, the company had two divisions, with 60 to 70 hospitals each.
Under the restructuring, Santa Barbara, Calif.-based Tenet will have a new southeast division, based in Atlanta; a central-northeast division (formerly the eastern division), based in Dallas; and a restructured western division, based in Irvine, Calif. Before the restructuring, the company had western and eastern divisions.
Tenet spokesman Harry Anderson said the goal is to shorten the chain of command between hospital chief executive officers and divisional heads.
"We're basically creating fewer hospitals to supervise, so there is more time to spend on each hospital," he said.
Analysts view the move as a continuation of the company's focus on its core hospitals-the same motivation that has led Tenet to try to sell 20 hospitals. The company said it hopes to complete those deals by year-end.
"You may have more divisions but fewer people in those divisions," said John Hindelong, a healthcare analyst at Donaldson, Lufkin & Jenrette in New York.
Hindelong said he expects the restructuring to save the company about $10 million per year, primarily through increased efficiencies.
Anderson said no job cuts are tied to the restructuring but that the reorganized Tenet will realize cost savings because it will be a "more nimble operation" with quicker response time.
He confirmed that the Tenet hospitals for sale include five in Arizona: 59-bed Community Hospital Medical Center in Phoenix, 125-bed Mesa (Ariz) General Hospital Medical Center, 296-bed St. Luke's Medical Center in Phoenix, 110-bed Tempe (Ariz.) St. Luke's Hospital and 80-bed Tucson (Ariz.) General Hospital.
Other hospitals on the block include 98-bed Culver Union Hospital in Crawfordsville, Ind.; 265-bed Columbia (Mo.) Regional Hospital; and 159-bed Winona Memorial Hospital in Indianapolis, Anderson said.
Anderson said Tenet expects to have final bids on all 20 hospitals by the end of the month and to negotiate definitive agreements by the end of the summer.
"There's been significant interest in every property up for sale," Anderson said.