Tenet Healthcare

Early years (1967–99)

Tenet was founded in 1967 by attorneys Richard Eamer, Leonard Cohen and John Bedrosian as National Medical Enterprises (NME) and headquartered in Los Angeles, California. By 1975, NME owned, operated, and managed 23 hospitals and a home health care business. In the 1970s, NME expanded into hospital construction and bought five Florida hospitals. By 1981, NME owned or managed 193 hospitals and nursing homes, and became the third-largest healthcare company in the U.S. In the mid-1980s, NME shifted its focus to specialty hospitals. By 1990, the company had 200 hospitals in its network and was the second-largest hospital company in the U.S.

After some scandals in the early 1990s (see below), NME divested its specialty facilities. Tenet possessed a dominant market share in Southern California at the time and envisaged the same prospects in South Florida, Louisiana, Texas, and the Philadelphia, PA area. In 1994, NME bought American Medical Holdings for $3.35 billion, which strengthened its presence in Southern California and South Florida, and extended its reach into New Orleans, LA and Texas. Following completion of the acquisition, NME changed its name to Tenet Healthcare Corporation. In 1996, Tenet CEO Jeffrey Barbakow moved Tenet's headquarters from Santa Monica, CA to Santa Barbara, CA. In 1998, Tenet purchased eight Philadelphia hospitals owned by the bankrupt Allegheny Health, Education & Research Foundation for $345 million.

Turn of the century (2000–13)

In 2002, one of Tenet's hospitals came under scrutiny for its surgical practices and another was investigated in a kickback scheme (see below). Federal investigations into the company's billing practices, particularly those related to Medicare, began late in 2002, leading to a decline in Tenet’s stock price of about 70%. In 2003, Trevor Fetter became CEO of Tenet and started Commitment to Quality, an initiative to improve the “quality, safety, service and outcomes of the care and services” provided by Tenet. To rebuild its ethics and compliance programs, Tenet hired a chief compliance officer to report directly to the company’s board of directors In 2003, Tenet sold or closed 14 hospitals and closed more than 20 facilities in 2004 to achieve its financial performance goals. Also in 2004, Tenet moved its headquarters from Santa Barbara, CA to Dallas, TX. In 2006, Tenet agreed to pay $725 million to the Justice Dept. to settle allegations of unusually high Medicare payments to Tenet hospitals in 2000 to 2002. Tenet also entered into a 5-year corporate integrity agreement with the U.S. Department of Health & Human Services that required the company to provide detailed financial reports on its patient mix, collection rates and accounts receivables. In 2007, Tenet appointed former Florida governor Jeb Bush to its board of directors to improve its reputation.

In 2008, Tenet launched Conifer Health Solutions, a healthcare services company. Conifer currently serves nearly 300 hospitals throughout the U.S. and processes $25 billion in net revenue annually. In early 2009, the price of Tenet stock briefly dipped below $4 per share after cresting above $200 per share in 2002. By the end of 2009, the company rebounded to become the S&P 500’s number 2 performer, with an operating revenue and net profit of $9 billion and $181 million, respectively.

In May 2011, Tenet’s board rejected a $7.3 billion takeover bid from Community Health Systems, Inc. The deal would have created the largest hospital company in the U.S. In April 2012, Tenet agreed to pay $42.75 million to resolve allegations that it improperly billed Medicare between 2005 and 2007. An internal investigation by Tenet revealed Medicare billing irregularities, and the company reported itself to the U.S. government. In May 2012, Tenet sold Diagnostic Imaging Services, Inc., its former diagnostic imaging center business in Louisiana. In August 2012, Tenet sold its Creighton University Medical Center in Nebraska. In 2013, Tenet acquired Vanguard Health Systems, based in Nashville, TN, in a deal worth $4.3 billion. Through its acquisition of Vanguard, Tenet acquired 28 hospitals and 39 outpatient centers that serve communities in Arizona, California, Illinois, Massachusetts, Michigan and Texas. The acquisition created the third-largest for-profit hospital chain in the U.S. in terms of revenue and the third-largest in number of hospitals owned. Through the end of 2013, Tenet’s stock price increased 816 percent, from $4.60 to $42.12, over the previous five years. Through the acquisition of Vanguard Health Systems, Tenet also acquired Abrazo Community Health Network the associated hospitals are located in Arizona.

Acquisitions and other operations (2014)

In 2014, Tenet ranked #229 in the annual Fortune 500 list of the largest American companies. In March 2014, Tenet formed a partnership with the Yale New Haven Health System to create a healthcare delivery network in Connecticut. Then in May 2014, Tenet announced plans to partner with the Texas Tech University Health Sciences Center in El Paso to develop a new 140-bed teaching hospital on the city’s west side. Tenet launched MedPost Urgent Care in May 2014, which is a national network of urgent care centers based in the lower United States. In June 2014, Tenet acquired a majority interest in Texas Regional Medical Center, a 70-bed community hospital in Sunnyvale, Texas, east of downtown Dallas. Also that month, Tenet opened Resolute Health Hospital in New Braunfels, Texas. The 128-bed hospital is located on a 56-acre “wellness” campus near San Antonio, Texas, and is Tenet's 79th hospital and 19th in Texas.

In July 2014 Tenet announced that Saint Mary's Hospital in Waterbury, Connecticut would be acquired by a subsidiary of the company, with the hospital's religious directives and uncompensated care policies remaining intact. This continued a trend of Tenet allowing a model of common ownership, where each acquired hospital has its own agreement conditions. This deal, and three others Tenet had planned in the state, unraveled when Tenet expressed concern with the conditions on the sale set by the state of Connecticut. The Waterbury hospital was ultimately purchased by Trinity Health

In late July 2014, Tenet signed a letter of intent to form a joint venture which would acquire and operate three hospitals in southern Arizona, two in Tucson and one in Nogales. In the agreement Tenet would be the majority owner and sole operator of the hospitals.

On August 1, 2014 Tenet acquired Emanuel Medical Center, a 209-bed hospital operated by the Swedish Evangelical Covenant Church located in Turlock, California, bringing the number of Tenet's hospitals at the time to 80 nationwide. Tenet announced in December 2014 that they had signed a letter of intent with the Baptist hospital system in Birmingham, Alabama to form a joint venture to own and operate the four Baptist hospitals plus Brookwood Medical Center, already owned by Tenet. Tenet would be the joint venture's majority owner.

In May 2014, Tenet rebranded its diverse urgent care centers into a wholly owned subsidiary, MedPost Urgent Care. Previously, Tenet's urgent care locations often took on the names of nearby Tenet hospitals. Alan Cason, VP of Tenet's outpatient services, was named MedPost CEO. At the time, MedPost has 23 facilities, with six in Texas, and others in Arizona, California, Florida, Georgia, Mississippi, Missouri and Tennessee.

As of the fourth quarter 2014, Tenet has turned a profit, explained by higher admissions and revenue (admissions through Medicaid increased by 20.5% after the Affordable Care Act). Hospital admissions also saw an increase during the last quarter of 2014, while the company's bad debt expense ratio decreased. At the same time, its full year financial projections affirmed a price of $1.32 to $2.4 per share with revenue of $17.4 to $17.7 billion, with its earnings topping $1.95 billion. On May 7, 2015, the Tenet board of directors appointed Trevor Fetter, Tenet's president and CEO, as chairman of the board. In 2015, the company moved from No. 229 to No. 170 on the Fortune 500.

Recent developments (2015-present)

In March 2015, Tenet announced an agreement to acquire a majority interest in United Surgical Partners International (USPI), which would make Tenet the largest operator of outpatient surgery centers in the United States. Tenet also announced an agreement to acquire Aspen Healthcare in Great Britain. On June 16, Tenet finalized their acquisition of Aspen Healthcare Ltd. and USPI. The USPI transaction raised the number of outpatient centers operated by Tenet to over 400, over double what they had operated prior. It also again made Tenet a multinational company, as Tenet acquired nine British healthcare facilities. Bill Wilcox remained CEO of USPI, with Kyle Burtnett of Tenet joining USPI as chief integration officer, among other roles. Through the deal, USPI will retain its independent branding.

Early in September 2015, Tenet acquired a majority interest in a three-hospital system in Tucson, Arizona, when Tenet, Dignity Health and Ascension Health formed a joint venture to own and operate Carondelet Health Network. The three hospitals' names remained unchanged, with close to 1,000 new beds added to the Tenet healthcare system as a result. The acquisition of Carondelet Health Network raised the total number of Tenet's general acute care hospitals to 83, and their number of short-stay surgical hospitals to 19. On May 11, 2015, it was announced that the Tenet-operated Abrazo Health, acquired in 2013, had been renamed Abrazo Community Health Network.

After first announcing the deal in March 2015, in January 2016 Tenet Healthcare closed a deal to form a joint venture with the non-profit organization Baylor Scott and White Health, with plans for the joint venture to own and operate a number of hospitals in North Texas. The hospitals, which were all rebranded under the Baylor name over the coming months, go by Baylor Scott & White Medical Center — Centennial, Baylor Scott & White Medical Center – White Rock, Baylor Scott & White Medical Center – Lake Pointe, and Baylor Scott & White Medical Center – Sunnyvale. On October 3, 2016, it was announced that Tenet had agreed to pay a $514 million settlement in an agreement with the Department of Justice. According to the lawsuit filed in 2014, four hopsitals then owned by Tenet had collaborated in a "kickback" scheme with Clinica de la Mama to increase hospital referrals of Medicaid patients, with two of Tenet's former subsidiaries admitting to "conspiring to defraud Medicaid." According to Modern Healthcare, as part of the agreement, the "federal government acknowledged that individuals at the hospitals withheld information from Tenet about the agreements and circumvented Tenet's policies and procedures to prevent such illegal conduct."

Operations

As of October 2016, Tenet Healthcare Corporate employs approximately 130,000 people. As of June 2015, Tenet operates six health care plans as well as Conifer Health Solutions, LLC, which provides healthcare business process services in the areas of revenue cycle management, value-based care and patient communications. Through its brands, subsidiaries, joint ventures, and partnerships with companies such as United Surgical Partners International (USPI), Tenet operates a total of nine facilities in the United Kingdom. Tenet also operates 470 outpatient centers in the United States, after the June 2015 acquisition of USPI almost doubled Tenet's prior count of 210 outpatient centers. Also in the United States, Tenet operates 20 "short-stay" surgical hospitals and 79 general acute care hospitals. Tenet-operated hospitals include four academic medical centers, two children’s hospitals, three specialty hospitals (one of which is temporarily closed for repairs) and a critical access hospital, with a total of 20,814 licensed beds as of early 2015, serving primarily urban and suburban communities in 14 states. In addition, Tenet subsidiaries own or lease and operate a number of medical office buildings, all located on or near Tenet hospital campuses. Tenet subsidiaries also operate free-standing and provider-based outpatient centers in 16 states, including diagnostic imaging centers, ambulatory surgery centers, satellite emergency departments and urgent care centers. Tenet owns over 500 physician practices as well.

MedPost Urgent Care

In May 2014, Tenet launched MedPost Urgent Care, a national network of urgent care centers. The launch was the result of Tenet rebranding its diverse urgent care centers into one company. Previously, Tenet's urgent care locations often took on the names of nearby Tenet hospitals. At the time of the rebranding, MedPost equaled 23 facilities, with six in Texas, and others in Arizona, California, Florida, Georgia, Mississippi, Missouri and Tennessee. According to Dr. Melissa Molina, the medical director of MedPost, the most common injuries the clinics see are on the arms and ankles, many through minor falls and accidents.

Awards and recognition

Tenet Healthcare has received numerous honors for executive and hospital leadership, nursing excellence, clinical quality, and recognition from insurers. In 2013, the American Heart Association recognized Tenet as a “Platinum Fit-Friendly Company.” Tenet’s board of directors was named the Outstanding Board of Directors for a Public Company by the Dallas Business Journal in September 2014.

The company's CEO Trevor Fetter has appeared several times on the “100 Most Influential People in Healthcare" list compiled by Modern Healthcare, ranking No. 13 in 2014. In 2011, Audrey Andrews, chief compliance officer at Tenet, was recognized as one of the “Top 25 Women in Healthcare" by Modern Healthcare. Likewise, in 2014 their SVP and chief clinical officer, Dr. Kelvin Baggett, was named on the magazine's list of “50 Most Influential Physician Executives & Leaders.” Tenet's CFO Dan Cancelmi was named CFO of the Year by the Dallas Business Journal in October 2014.

Philanthropy

In 2002, the Tenet Healthcare Foundation awarded a $1 million grant to provide financial support to Latino nursing students . In 2004, Tenet Healthcare Foundation, Tenet’s charitable giving arm, awarded $2.78 million to support accelerated undergraduate and graduate nursing degree programs at five nursing colleges in Southern California, South Florida, Georgia and Texas. In 2012, Tenet joined GE and Verizon in supporting the launch of the Clinton Health Matters Initiative, created by the William J. Clinton Foundation to build on its work on global health and childhood obesity. In Tenet’s “2013 Sustainability Report: Tenet Cares,” the company stated that its support for local communities that year totaled $545 million in uncompensated care and $158 million in charity care. In 2014, Tenet Healthcare was a presenting sponsor of the third annual Clinton Foundation Health Matters Conference in La Quinta, California.

Psychiatric fraud

In the early 1990s as National Medical Enterprises, the company was accused of committing fraud by admitting thousands of psychiatric patients who did not need hospitalization and then charging these patients inflated prices. In 1991, the federal government investigated the company for fraud and conspiracy. In 1993, law enforcement raided company offices in an attempt to show that the company was defrauding patients and insurance companies. In 1994, the company paid $2.5 million to settle lawsuits from 23 patients at its psychiatric hospitals. Again in 1994, National Medical Enterprises settled fraud charges with the United States and 28 states involving payments of a record $380 million at the time and federal guilty pleas on eight criminal counts by two of its units. The company also agreed to a 5-year corporate integrity agreement with the U.S. Department of Health and Human Services.

Unnecessary heart surgeries

In the late 1990s through the early 2000s, Redding Medical Center (at the time, a Tenet-owned hospital), was investigated for performing unnecessary heart surgeries on over 600 patients. To settle these allegations, Tenet agreed to pay a $54 million fine to the federal government and the state of California, without admitting wrongdoing. This settlement did not preclude civil or criminal charges against individuals of the company. In order for the hospital to continue receiving Medicare reimbursements, Tenet was compelled by federal regulators to sell the hospital which was subsequently renamed Shasta Regional Medical Center. In 2004, Tenet paid an additional $395 million to 769 patients to settle litigation for the unnecessary surgeries. The scandal and subsequent federal investigation are described in the book Coronary: A True Story of Medicine Gone Awry by author Stephen Klaidman.

Medicare fraud

In June 2006, Tenet agreed to pay $725 million in cash and give up $175 million of Medicare payments for a total of $900 million in fees to resolve claims it defrauded the federal government for over-billing Medicare claims during the 1990s. To finance the settlement, they sold 11 hospitals in four states including Memorial Medical Center (see below). In September of that year, Tenet entered into a 5-year corporate integrity agreement with the U.S. Department of Health and Human Services. That agreement expired on September 27, 2011.

Hurricane Katrina

In July 2006, in the aftermath of Hurricane Katrina in August 2005, Dr. Anna Pou and nurses Lori Budo and Cheri Landry, employees at Tenet-owned Memorial Medical Center in New Orleans, LA, were arrested after being charged by Louisiana Attorney General Charles Foti of second-degree murder in the deaths of four patients. In August 2007, a New Orleans grand jury declined to indict the three women and a New Orleans judge expunged their arrest records. In July 2007, Dr. Pou sued Foti for defamation and damage to her career. In June 2006, Tenet announced it planned to sell Memorial Medical Center and three other hospitals in the greater New Orleans area. In July 2009, Gov. Bobby Jindal approved by a bill passed by the Louisiana Legislature to reimburse Pou’s legal fees, which totaled more than $450,000.

Tax dodging and lobbying

In December 2011, the non-partisan organization Public Campaign criticized Tenet Healthcare for spending $3.43 million on lobbying and not paying any taxes during 2008–2010, instead getting $48 million in tax rebates, despite making a profit of $415 million, and increasing executive pay by 19% to $24 million in 2010 for its top 5 executives.

Florida pediatric heart surgery standards

In 2015, CNN reported that Tenet had lobbied the governor of Florida Rick Scott and Republican Party Florida legislators in order to remove hospital standard rules for pediatric heart surgeries, after one of its hospitals failed to meet standards. Both the officials and Tenet denied any wrongdoing, with Tenet stating to the press that "at no time have we discussed the pediatric cardiac standards with the governor or his office, or with any elected official or anyone on their staff... our opinion was not sought on the standards nor have we expressed a position on the possible repeal of the standards or the role of the Cardiac Technical Advisory Panel." Florida Health released a statement indicating that the legal basis for the removal of pediatric surgery standards had been revoked in 2001. This revocation invalidated the standards and it was an oversight that they were not formally stricken from record until 2015.