Tenet Healthcare Corp., Santa Barbara, Calif., said it won't face a liquidity crisis, as some critics have contended, despite an expected negative cash flow in 2004 and 2003 losses of $1.5 billion, or $3.17 per share. The 2003 loss includes impairment and restructuring charges of nearly $1.5 billion in the fourth quarter, largely related to writing down the book value of 27 hospitals the company plans to sell. By comparison, Tenet earned $817 million, or $1.64 per share, in 2002. Annual revenue fell 2.9% to $13.2 billion in 2003. The company repeated its expectation of using $500 million to $600 million more in cash in 2004 than it takes in. CFO Stephen Farber said cash flow will improve by $300 million to $400 million in 2005, possibly to break even, because of improving operations and the sale of hospitals on Tenet's divestiture list.
In its 10K annual report, Tenet also disclosed that it has set aside $30.2 million to pay the tentative settlements of two federal investigations. Tenet said it has signed a letter of understanding to settle a 1997 whistleblower lawsuit against its North Ridge Medical Center, Fort Lauderdale, Fla., that alleged the company overpaid when acquiring physician practices as a way to induce referrals, then filed false Medicare cost reports that contained kickback-generated claims. The U.S. Justice Department joined some of the allegations in 2001. Tenet also said it has a tentative agreement to settle allegations that it improperly coded the post-discharge status of some Medicare patients from Jan. 1, 1992, to June 30, 2000. Tenet owns or operates 100 hospitals, including a total of 31 it plans to divest. -- by Vince Galloro