Tenet's multiyear strategy pays off

Tenet Healthcare is seeing its situation improve, with growth in key metrics, more favorable payer contracts and a burgeoning services business unit.

The Dallas-based operator of 80 hospitals and 190 outpatient centers posted a net loss of $26 million for shareholders in the second quarter (down from $50 million this time last year), and projected full-year earnings of $1.85 billion, before interest, taxes, depreciation and amortization.

“All growth and profitability metrics exceeded our expectations,” said Trevor Fetter, Tenet president and CEO, in a media release. “Our success at capturing incremental market share through strategic investments, service line expansion, and successfully positioning Tenet’s hospitals to benefit from key aspects of the Affordable Care Act all contributed to a great quarter.”

Three quarters after the completed acquisition of Vanguard Health Systems last October, Tenet saw net quarterly operating revenues of $4 billion, up 2.6 percent from last year, thanks to volume growth, improved terms in commercial managed care contracts and growth in its Conifer health software and management business.

Also, thanks in part to newly-subsidized exchange health plans and expanded Medicaid in some states, Tenet grew at “near-record rates” in commercial patient volumes, inpatient admissions, outpatient visits, surgeries and emergency department visits, said Fetter.

Inpatient hospital admissions increased by 2.8 percent year-over-year, with the growth trend in commercial admissions “achieving the best quarterly same-hospital performance in more than a decade” and paying admissions increasing 4.8 percent. Outpatient visits increased 7 percent, surgeries increased 8 percent and emergency department visits increased 4 percent.

In the five states that expanded Medicaid eligibility under the Affordable Care Act, Tenet saw a 54.3 percent decline in uninsured plus charity admissions and a 22 percent increase in Medicaid-covered admissions.

Across the entire company, uninsured plus charity admissions declined by 21.8 percent, while Medicaid admissions increased 11 percent – and about 27,000 admissions and 34,000 outpatient visits were by patients insured through new ACA exchange plans.

Bad debt expenses also declined 18 percent, to $320 million in the second quarter.

“Our multi-year strategy to transform Tenet from a regional operator of hospitals to a national diversified healthcare services company is driving significant growth,” said Fetter. “Our business trends are positive, and we are in the early days of a long term transformation in the delivery and financing of healthcare services.”