Tenet Healthcare Corp., Dallas, said it lost $2.02 billion for the fourth quarter ended Dec. 31, 2004, or $4.33 per share, more than double its losses in the year-ago quarter, as the company took massive charges related to restructuring and its $395 million settlement with patients at the former Redding (Calif.) Medical Center. Tenet warned investors in December that it expected to post a loss on charges. The loss was more than double Tenet's 2003 fourth-quarter loss of $954 million, or $2.05 per share. Fourth-quarter revenue declined 2% to $2.41 billion. For the year, Tenet lost $2.64 billion, or $5.66 per share, compared with a loss of $1.48 billion, or $3.17 per share, in 2003. Revenue dropped 2.2% to $9.92 billion. Tenet also said it completed the sale of four Orange County, Calif., hospitals to Integrated Healthcare Holdings, Costa Mesa, Calif.
Tenet said that the revenue decline reflected the company's promise of discounted care for uninsured patients. Tenet announced its "Compact with Uninsured Patients" in 2003, but implementation did not begin until March 2004. Forty of Tenet's 69 core hospitals had the policy in place as of Dec. 31, 2004. The discounts directly reduced revenue, but they also reduced bad debt expense, so the policy didn't have a significant effect on Tenet's bottom line, the company said. Revenue would have been up 3.7% for the fourth quarter had the discount policy not been in place, Tenet said. The company did not provide adjusted figures for the fiscal year.
Tenet also reported lower same-hospital volume for the quarter and year compared with the year-ago periods, with all figures based on 67 of its 69 core hospitals. Inpatient admissions were down 3.8% for the quarter and 2% for the fiscal year. Outpatient visits were down 9.3% for the quarter and 5.8% for the fiscal year. Tenet said the weaker flu season affected fourth-quarter volume, but also pointed to several company-specific factors, including its strategy of closing some low-margin service lines and the referral patterns of "splitter" physicians, who refer patients to multiple hospitals and tend to be affected by negative media reports about the company. -- by Vince Galloro