Tenet Healthcare Corp., Santa Barbara, Calif., reported a second-quarter loss more than double its loss in the 2003 second quarter, as the company took huge noncash write-downs on the book value of hospitals it is selling and on patient accounts it doesn't expect to collect. Tenet lost $426 million, or 91 cents per share, for the quarter, compared with a loss of $195 million, or 42 cents per share, in the year-ago quarter. Revenue was down 3.3% to $2.57 billion. Same-hospital admissions and outpatient visits fell 3% and 3.3%, respectively, compared with the 2003 second quarter. For the six months, Tenet lost $548 million, or $1.18 per share, compared with a loss of $215 million, or 46 cents per share, in the first half of 2003. Revenue dropped 3.1% to $5.24 billion, as admissions and outpatient visits fell 1.6% and 1.7%, respectively.
Meanwhile, Chief Financial Officer Stephen Farber, 35, said he will resign rather than transfer to Dallas with Tenet when the company completes its headquarters move in 2005. Farber, a former investment banker, said in a news release that he expects to move to the New York area and work again on Wall Street. He will continue as CFO for several months while Tenet searches for a replacement. Also, in its quarterly securities report, Tenet revealed that the U.S. attorney in New Orleans has issued more subpoenas in an investigation of an HMO partly owned by Tenet.
Tenet said its new discount program for self-pay patients, which began in the second quarter, has changed the way it writes off self-pay accounts, resulting in an after-tax charge of $156 million. Instead of waiting 120 days after a bill is sent, Tenet immediately writes off 92% of the bill, Farber said. The company took several other noncash charges in the quarter, including a $155 million after-tax charge to write down the value of many of the hospitals it's holding for sale. Still, Farber said the company's financial status is improving, with cash flow from operations for the first half of 2004 already reaching a level the company had hoped to achieve for the full year. -- by Vince Galloro