After warning investors in September that the third quarter started weakly, Tenet Healthcare Corp. said a strong September partially offset those weak two months.
Strong September figures boost Tenet results
Dallas-based Tenet reported net income of $6 million (PDF), after recording $932 million in net income in 2010's third quarter, according to its earnings release. The year-ago quarter included a $1 billion credit from the recognition of losses in previous years offsetting future income tax liabilities. Revenue increased 3.5%, to $2.34 billion. Tenet reported same-facility volume increases of 1.5% for admissions and 2.3% for adjusted admissions, comparing the quarters.
Case-mix index in its Medicare fee-for-service business declined and, unlike previous periods, increases in acuity in its commercial and Medicaid business weren't enough to offset this softness, said Trevor Fetter, Tenet's president and CEO. The company saw much of this growth in Medicaid, accounting for 78% of its inpatient growth and 28% of its outpatient growth, Fetter said. The company's hospitals have sufficient capacity so that this volume is not displacing better-paying business, but the margin on Medicaid is lower than Medicare or commercial, Fetter added.
Outpatient volume grew 3.4% on a same-facility basis, less than the company expected, Fetter said. The company has completed 10 acquisitions of ambulatory surgery centers this year at a cost of $45 million, but Tenet expected to complete more such deals in the first nine months of the year, he added. Tenet expects to complete five more ASC deals in the fourth quarter.
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