Huh? Hospital Makes More Money With Less Business?

07:49 AM CDT on Wednesday, August 4, 2010


By JASON ROBERSON / The Dallas Morning News

Tenet Healthcare Corp. said Tuesday it earned money and increased revenue in the second quarter despite a weak economy and fewer patient admissions.

CEO Trevor Fetter said the results demonstrate the company’s strength in addressing challenges of “a continuing soft macroeconomic environment.”

For the three months that ended June 30, the Dallas-based hospital system reported net income of $25 million, or 5 cents per share, up from a loss of $15 million, or 3 cents a share, during the same period a year earlier.

Tenet’s adjusted earnings before interest, taxes, depreciation and amortization were $268 million in the quarter, an increase of $22 million, or 8.9 percent, from $246 million. Operating revenue increased 3 percent to $2.3 billion.

But private insurance admissions and outpatient visits declined 7.2 percent and 5.4 percent, respectively. Hospitals emphasize commercial admissions because they’re more likely to get paid by patients with insurance, usually offered through their jobs.

“While commercial volumes are a part of our story, they’re not the whole story,” Fetter said on a conference call with investors and reporters.

He said that even though private insurance or commercial admissions fell, Tenet had a better mix of commercial business. Lower paying health plans were replaced with higher paying health plans, leading to a 2 percent commercial revenue growth.

Tenet’s shares closed Tuesday at $4.39, down 20 cents.