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Tenet Healthcare is here to spread the doctrine of good health. The for-profit company owns or leases 50 acute care hospitals with some 13,000 beds in 10 US states. Almost two-thirds of Tenet's hospital beds are in California, Florida, and Texas. They range from small community facilities offering basic care to major hospitals, such as the 600-bed Brookwood – more... Medical Center in Birmingham, Alabama. In addition to its acute care holdings, Tenet also operates specialty hospitals, skilled nursing facilities, physician practices, outpatient centers, imaging centers, and other health care facilities that form regional networks around its main hospitals.

Operations

While it primarily provides inpatient (overnight stay) hospital services, Tenet has expanded its outpatient care (care that doesn't require a hospital stay) segment, and the company now derives about 30% of its revenues from such services.

In addition to providing patient care, Tenet has diversified by forming Conifer Health Solutions, a patient billing and communications company, that serves more than 300 Tenet and and non-Tenet hospitals throughout the US. Conifer also serves as the system's collection agency for patients who fall behind in their payments. Conifer added $59 million to the company's revenues in 2011 -- nearly double what the unit brought in during 2010.

Financial Analysis

Tenet has seen its revenues climb modestly despite the general pressures on the larger economy. After adjusting for doubtful accounts (patients who couldn't pay their bills), its 2011 revenues amounted to $8.8 billion. That was up from its 2010 net operating revenues of $8.5 billion. The company's net income in 2011 settled back down to a modest $82 million after receiving an income tax benefit boost in 2010. As parts of the Affordable Care Act take effect, Tenet is hopeful that it will begin to receive government reimbursements for the care it provides to uninsured and underinsured patients -- thus improving its overall revenues.

Strategy

Tenet aggressively negotiates managed care contracts with national, regional, and local HMO and PPO companies. Such contracts accounted for $5.2 billion of its annual revenues in 2011. More than 60% of Tenet's managed care patient revenue comes from its top 10 payers.

Tenet is intently focused on growing its outpatient services, both organically and through acquisitions. Outpatient care doesn't require a hospital stay and has higher margins. The company also remains open to growth through acquisition of other hospitals and service providers, including information technology firms.

Tenet has refined its focus by disposing of some assets, including supply chain and clinical workforce management firm Broadlane (2010, $159 million). The company also sold its majority 74% interest in the 400-bed Creighton University Medical Center in Omaha to Alegent Creighton Health for about $60 million. The sale marked Tenet's exit from the Nebraska market.

Mergers & Acquisitions

In 2012 the firm's Conifer subsidiary moved to expand in the business process management field when it agreed to acquire InforMed Health Care Solutions. The purchase widens the footprint of Conifer's existing population health management subsidiary, Cap Management, by adding information systems that assist hospitals, employers, and insurers in lowering costs through centralized data collection and analysis. – less

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