Management changes at Tenet Healthcare Corp., Santa Barbara, Calif., led to another sell-off of Tenet stock as investors fretted about the extent of the company's troubles. Tenet's stock price continued a plunge that began in late October with an analyst's report questioning projected profit and revenue growth; the fall was sustained by a string of subsequent bad news that included an HHS audit of Tenet's outlier payments, an antitrust review of a Tenet hospital merger in Missouri and an FBI investigation of two physicians affiliated with a Tenet hospital. As of midday today, the hospital chain's stock was trading at about $15 per share compared with about $49 per share late last month. Standard & Poor's downgraded Tenet's $3.6 billion in debt to BBB- and assigned a negative outlook. "The overwhelming financial concern remains the undefined extent of Tenet's recent travails," S&P said.
In an effort to address its problems, Tenet late yesterday announced that former CFO Trevor Fetter would return to the company in the newly created position of president. Fetter, 42, has resigned as CEO of Broadlane, San Francisco, but remains chairman. Tenet also said it would reconsider an aggressive pricing strategy that has led to outlier rates well above industry averages. In a news release, Chairman and CEO Jeffrey Barbakow said, "While our pricing approach was entirely consistent with the Medicare regulations, it put us on a course that was inconsistent with the position and posture we want Tenet to have within our industry." With Fetter's appointment, Tenet lost two top executives: CFO and Chief Corporate Officer David Dennis, 53, who resigned, and COO Thomas Mackey, 54, who retired. -- by Vince Galloro