Tenet Healthcare Corp. seems to have chosen wisely when it plucked a perennially money-losing Atlanta-area hospital from the bankruptcy bin.
South Fulton Medical Center in East Point, Ga., filed for Chapter 11 bankruptcy protection last April after posting an operating loss of $9.2 million on net revenue of $90.1 million for the year ended June 2000.
But since the hospital filed for bankruptcy and announced it was for sale to a for-profit company, its fortunes have been dramatically transformed-mostly by a reduction in staff. The 369-bed hospital registered $4.5 million in operating income in the five-month period since laying off 200 employees last September.
Asked if Tenet had stumbled onto a bankruptcy bargain, spokesman Gary Hopkins said, "We think it's a great deal for the community-absolutely." He said he believes it will take a bit longer than five months to turn it around.
Tenet operates four facilities in the Atlanta area and was the only company to bid for the hospital. The U.S. Bankruptcy Court in Atlanta approved the sale March 26 (April 2, p. 28). The sale is expected to close April 15, and Tenet will take over the following day.
Like the hospital, Tenet isn't doing badly. The nation's second-largest hospital company, with 110 hospitals, reported earnings of 60 cents per share for its third quarter of fiscal 2001 ended Feb. 28.
Tenet reported net income of $198 million for the third quarter; more than five times its $38 million profit in the prior-year quarter; the figure represents a 30% increase over profits in the prior year if impairment charges and gains on facility sales are excluded. Revenue was $3 billion, up from $2.85 billion in the 2000 quarter.
For the nine-month period, Tenet reported a profit of $527 million, or $1.62 per share, on revenue of $8.84 billion. That compares with a profit of $282 million, or 90 cents per share, on revenue of $8.5 billion in the prior year. Strong cash flow enabled Tenet to reduce its debt by $188 million during the quarter, leaving it with total debt of $4.87 billion, down $1.14 billion from a year ago.
-With Barbara Kirchheimer