Tenet Healthcare Corp. continued a string of financial misses Monday by posting a $44 million net loss on continuing operations in its second quarter, while agreeing to settle an Atlanta kickback case that was hanging over it.
The Dallas-based hospital chain announced Monday that it has agreed to pay $514 million to settle a lawsuit over alleged kickbacks for maternity referrals by four hospitals it currently or previously owned.
That's $109 million more than the $407 million in reserves Tenet had booked in May to settle the criminal investigation.
The four former Tenet hospitals—Atlanta Medical Center; North Fulton Hospital, Roswell, Ga.; Spalding Regional Hospital, Griffin, Ga.; and Hilton Head Hospital on Hilton Head Island, S.C.—contracted with clinics operated by Hispanic Medical Management for prenatal care provided predominantly to uninsured patients.
The government alleges that payments Tenet made to Hispanic Medical Management for translation, marketing and help with Medicaid eligibility determinations amounted to illegal kickbacks for referrals and violated the False Claims Act.
As part of the settlement, Tenet agreed to appoint a corporate monitor for three years, that non-asset subsidiaries that once operated Atlanta Medical Center and North Fulton Hospital plead guilty to a single-count indictment and a corporate integrity agreement be signed.
Tenet sold three of the named hospitals—Atlanta Medical Center, North Fulton Hospital and Spalding Regional—to Marietta, Ga.-based WellStar Health System earlier this year, along with two other Atlanta-area hospitals. Tenet continues to own Hilton Head Hospital.
Tenet's 44 cents a share net loss from continuing operations was 8 cents short of analyst consensus for the company.
Revenue in the quarter jumped 8% to $5.2 billion from $4.8 billion in the year-earlier quarter. Same-hospital patient revenue grew 4% in the second quarter, driven by 0.5% growth in adjusted admissions and 4% growth in revenue per adjusted admission, the company said.
Tenet joins LifePoint Health and Universal Health Services this quarter in falling short of analyst expectations. Community Health Systems announces its earnings Tuesday.
