Tenet Healthcare Corp., Santa Barbara, Calif., reported a third-quarter loss of $308 million, or 66 cents per share, as outlier revenue at the investor-owned chain plunged and the company took several multimillion-dollar charges to increase its bad-debt provision, account for litigation and settlement costs, and offset the costs of several hospital sales. By comparison, the company earned $328 million, or 66 cents per share, in the year-ago quarter. Revenue declined 6.4% to $3.3 billion, which Tenet said reflected lower payments under Medicare's new outlier policy. The effect of reduced outlier payments -- $16 million in the third quarter, compared with $261 million in the prior-year quarter -- was partially offset by increases in other payer categories and increased admissions, Tenet said. The company, which previously said third-quarter results would be hurt by an increase in uninsured and nonpaying patients, doubled its provision for bad debt to $522 million. The company also took a $99 million, noncash charge for discontinued operations and a $253 million charge for litigation and settlements, primarily to increase the company's reserve in a breach-of-contract dispute brought by a founder of Tenet's predecessor company, National Medical Enterprises. The company reported its results in a Securities and Exchange Commission filing after the stock market closed yesterday.
For the nine months, Tenet lost $523 million, or $1.12 per share, compared with net income of $848 million, or $1.69 per share, for the year-ago period. Revenue fell 1.9% to $10.1 billion. Notably, the company's Medicare outlier revenue dropped to $50 million in the current nine-month period, compared with $681 million in the year-ago period. Tenet, which owns or operates 105 hospitals, continues to be the subject of several government investigations. In other Tenet news, two of the company's Philadelphia-area hospitals have suspended their trauma services. Hahnemann University Hospital closed its trauma center until it can fill at least one of three vacant surgeon jobs. Medical College of Pennsylvania Hospital diverted trauma patients elsewhere because of a looming nurses' strike. -- by Patrick Reilly