Tenet Healthcare Corp., Santa Barbara, Calif., announced a new pricing strategy and lowered its earnings guidance for fiscal 2003 and 2004. The move is a response to the disclosure last month that Tenet receives unusually high Medicare outlier payments and the resulting controversy. Tenet, the nation's second-largest hospital company, said it now expects fiscal 2003 operating earnings per share of $2.38 to $2.78, compared with its previous projection of at least $2.93 per share. The low figure assumes Tenet will no longer receive outlier payments as of Jan. 1, while the upper limit assumes that existing Medicare policy will continue through Tenet's current fiscal year. Tenet's fiscal year ends May 31. For fiscal 2004, the company projected earnings of $2 per share, assuming total Medicare outlier payments of $150 million. The company's outlier payments for fiscal 2002 were $763 million. Tenet said it is pursuing new contracts with health insurers that are significantly based on per diem rates. It also will reduce the use of stop-loss payments tied to gross charges. In addition, Tenet proposed a discounted price schedule at managed-care rates for uninsured patients. -- by Laura B. Benko
Tenet revises pricing strategy, earnings projections
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