Beleaguered for-profit hospital operator Tenet Healthcare
It will accept payment of about $8 million a month (rather than the previous $65 million a month) in anticipation of governmental changes to its reimbursement policy.
The company has been under fire for several months now, with investigations and subpoenas in abundance. It has been a crisis for shareholders, too, with shares plummeting from the low $50s back in October to the present $16 to $17 level.
Tenet's level of Medicare payments for outliers has been on the list of concerns the entire time. For certain medical cases, they are very expensive reimbursements -- above and beyond average Medicare reimbursements. Tenet has been receiving a higher percentage than its peers, though outlier payments only represent about 5% of the company's total patient revenues.
Tenet itself has called its past pricing policies "aggressive," and both its chief financial officer and chief operating officer resigned in light of this back in November. The new leadership has undertaken a study of its own (in addition to Justice Department and Health and Human Services investigations) into the company's outlier Medicare payments, and is trying to bring Tenet's payments back in line with the industry.
On Thursday, the Justice Department demanded Tenet turn over documents related to its outlier payments, and the company said it was cooperating fully. That makes today's announcement that much more interesting. Perhaps Tenet's internal investigation was leading to this end, so it decided this was its best move. Of course, it hasn't admitted to illegal activity, but apparently it was at least gaming the system a bit.
Tenet's fiscal 2003 earnings will still fall within last month's reduced range of $2.38 to $2.78. Shares, which have apparently priced in all the bad news, are off only 1.3% for the day. Medicare still has to accept Tenet's offer, though, and there's no guarantee it will.
[Tenet Healthcare was Fool co-founder David Gardner's stock pick in January's Motley Fool Stock Advisor.]