Tenet Healthcare Corp., Santa Barbara, Calif., said today that its problems with Medicare outlier reimbursements have spread to managed-care contract negotiations. The company acknowledged what analysts had been predicting -- that health plans are driving a harder bargain with Tenet than its competitors because of Tenet's prior strategy of rapidly increasing its gross charges. That strategy boosted reimbursements under the Medicare outlier program and the stop-loss provisions of many managed-care contracts. Both of those measures are designed to reimburse hospitals for treating the costliest patients. Tenet's voluntary reduction in Medicare outlier payments will lower 2003 revenue by $760 million, the company said. Tenet also said its second-quarter earnings would be far below analysts' expectations of 34 cents per share. Over the next 12 months, Tenet said, the company would earn 80 cents to $1 per share on continuing operations, not including any special charges. Tenet said that it expects to take such charges in the next 12 months but cannot estimate their value. Tenet owns and operates 114 hospitals, including 14 hospitals slated for sale or closure. -- by Vince Galloro
Tenet woes spread to contract talks
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