Tenet Healthcare Corp., Santa Barbara, Calif., confirmed that it plans to sell 27 hospitals, including 19 in its core California market, as part of a massive restructuring of the troubled company. The other eight hospitals on the list are located in Louisiana, Massachusetts, Missouri and Texas. Modern Healthcare disclosed in an e-mail news alert Monday that Tenet was expected to announce a major asset sale shortly. Tenet said California's seismic-safety regulations played a major role in its choice of hospitals. The 19 hospitals slated for sale require $1.6 billion in renovations to meet the state regulations, whereas the 17 California hospitals Tenet plans to keep need less than $300 million in renovations. The 19 hospitals posted operating losses of about $36 million on revenue of $1.8 billion. The other eight hospitals broke even on $900 million in operating revenue. Along with previously announced hospital closures and lease terminations, Tenet's plan would trim its portfolio to 69 hospitals from 100.
The company also said it expects to report earnings far below analysts' expectations of 11 cents per share for the fourth quarter and 50 cents per share for fiscal 2003. Tenet expects to record charges worth a total of $1.4 billion in the fourth quarter related to the sales plans. The company also said it is fighting managed-care payers, either in arbitration or court, over $250 million in disputed accounts receivable. Tenet previously disclosed that commercial health plans were balking at more claims than in the past, as a reaction to the revelation of Tenet's strategy of rapidly increasing gross charges. Tenet's stock fell 15% in morning trading to $13.65 per share. -- by Vince Galloro