Tenet Healthcare Corp. plans to lay off 2,000 workers. That's up from 1,300 jobs that were initially going to be eliminated. Ronald Rittenmeyer, who took over as CEO in October after Trevor Fetter resigned, is charged with reshaping an organization that's carrying about $15 billion in debt. Modern Healthcare reporter Tara Bannow caught up with Rittenmeyer at last week's J.P. Morgan Healthcare Conference.
1) Job cuts
It won't have any effect on the operations. These are broader-based cuts. We're eliminating duplication for the most part. We're consolidating regions, and we've eliminated that whole layer. Decisionmaking gets closer to where the action is. And it allows you to run the organization in a more effective manner. Every job is important and you don't want to lose any, but the reality is companies need to adjust to what the marketplace is demanding.
We looked at the workflow we had. If you eliminate the work, you kind of eliminate the need for the job. So it's really a focus on eliminating steps and just building a much more agile organization.
2) Other cost-cutting
We are renegotiating supplier contracts. We're going through the whole company, looking at what we do, where we spend money and why we spend that money. What value does that give us from a business standpoint?
3) Sale of Conifer Health Solutions
The process has started. It's never something that you click your fingers and say, "OK, we're for sale." We've already gotten interest from a larger number of different firms across a wide spectrum. I would imagine it could be late summer because we have to go through the whole process of figuring out the group. Conifer is a valuable asset; it's not a strategic asset. It's very important to us because it does collect our cash. It does a lot of other business for us in our hospitals. Whoever ends up on the list, it's a function of price, their capability and depth in terms of their ability to operate it. We need to be sure they're the right vendor for us … because they'll become a vendor. And then we'll put in service-line agreements that will be very definitive about performance.
4) United Surgical Partners International ownership
It's a very important part of our business. We've invested a lot of money in USPI. We own 80% and by July 2019 or sooner, we'll own 95% if we can do it. We own roughly 5% of surgery centers in the U.S. So if you step back and think about that, 60% are still independent. That's a great opportunity to continue to expand this business.
5) Selling hospitals
Eight are in process. And Aspen Healthcare, which is in our (overseas) ambulatory segment, that's nine in the United Kingdom. Beyond that, I would say that we're going to continue to look at anything that doesn't fit in our core business market. People think we divest because we're highly leveraged. That is not why we divest. We divest because hospitals don't fit our strategy and we're not going to fire-sale those either. We're not married to a number, we're married to developing a market.