Tenet Healthcare Corp., Dallas, provided an initial accounting of how Hurricane Katrina affected the company's finances, but the deeper problem may be the one that has plagued Tenet for nearly three years. Uncertainty related to the investigations of the company's Medicare outlier payments and physician relationships continues to prompt physicians to hedge their bets by splitting their patient admissions between Tenet and competing hospitals.
Tenet said it slashed the accounting value of hospitals and imaging centers affected by Katrina by $201 million pre-tax in its third quarter, ended Sept. 30. It also incurred $40 million in Katrina-related costs during the quarter, including $27 million in employee salaries and $2 million for evacuations. Its two hospitals in downtown New Orleans remain closed, while its three hospitals in the New Orleans suburbs and its Gulf Coast Medical Center in Biloxi, Miss., are slowly ramping up their operations.
Even excluding these six hospitals, however, admissions and outpatient visits were down 1.4% and 4.3%, respectively, for the third quarter compared with year-ago figures, Tenet said. Surgeries were up 0.8%. Besides the uncertainty, Tenet said the drop in its capital expenditures--initiated to counter a dip in cash flow--has made it harder for some Tenet hospitals to compete with their not-for-profit rivals.
Tenet said its loss for the third quarter was much higher than in the year-ago quarter--$408 million compared with $70 million. Revenue fell 1.7% to $2.39 billion; however, without the effects of the company's discount policy for the uninsured, revenue was up 2.1%. In the nine months ended Sept. 30, Tenet said it lost $432 million, compared with $618 million in the year-ago period.