Tenet Healthcare

Tenet was first incorporated in 1969,[8] by attorneys Richard Eamer, Leonard Cohen and John Bedrosian, as National Medical Enterprises, (NME) and headquartered in Los Angeles, California.[14] By 1975, NME owned, operated, and managed 23 hospitals and a home health care business.[14][15] 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.[14] 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.[14][15]

After some scandals in the early 1990s (see below), NME divested its specialty facilities.[14] 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, Pennsylvania area. In 1994, NME bought American Medical Holdings for $3.35 billion, which strengthened its presence in Southern California and South Florida, and extended into New Orleans, Louisiana and Texas.[16][17] Following completion of the acquisition, NME changed its name to Tenet Healthcare Corporation.[16] In 1996, Tenet CEO Jeffrey Barbakow moved Tenet's headquarters from Santa Monica, California to Santa Barbara.[18] In 1998, Tenet purchased eight Philadelphia hospitals owned by the bankrupt Allegheny Health, Education & Research Foundation for $345 million.[19]

In 2002, one of Tenet's hospitals came under scrutiny for its surgical practices and another was investigated in a kickback scheme (see below).[20] 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%.[14][18] 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.[21][22] To rebuild its ethics and compliance programs, Tenet hired a chief compliance officer to report directly to the company's board of directors.[23][24] In 2003, Tenet sold or closed 14 hospitals and closed more than 20 facilities in 2004 to achieve its financial performance goals.[25][26] Also in 2004, Tenet moved its headquarters from Santa Barbara, California to Dallas, Texas.[18] 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.[27][28] 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.[29][30] In 2007, Tenet appointed former Florida governor Jeb Bush to its board of directors to improve its reputation.[31]

In 2008, Tenet launched Conifer Health Solutions, a healthcare services company.[9][32] As of 2018, Conifer served approximately 800 clients in the United States[33] and processed $30 billion in net revenue annually.[34] In early 2009, the price of Tenet stock briefly dipped below $4 per share after cresting above $200 per share in 2002.[35] 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.[36][37][38] On July 24, 2019, Tenet announced it intended to "spin-off" Conifer Health Solutions into an independent publicly traded company. Tenet will be a "national health care delivery platform operating through hospitals and outpatient centers". Conifer, in turn, will "focus on providing revenue cycle management" and care services to other healthcare providers. The move was supported by minority shareholder CommonSpirit, and would be completed by the end of the 2021 second quarter.[39][40]

In May 2011, Tenet's board rejected a $7.3 billion takeover bid from Community Health Systems, Inc.[41] The deal would have created the largest hospital company in the U.S.[41] In April 2012, Tenet agreed to pay $42.75 million to resolve allegations that it improperly billed Medicare between 2005 and 2007.[42] 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.[43] In 2013, Tenet acquired Vanguard Health Systems, based in Nashville, Tennessee, in a deal worth $4.3 billion.[44][45] Through its acquisition of Vanguard, Tenet acquired 28 hospitals and 39 outpatient centers that served communities in Arizona, California, Illinois, Massachusetts, Michigan and Texas.[43][45][46] 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.[12][47] Through the end of 2013, Tenet's stock price increased 816 percent, from $4.60 to $42.12, over the previous five years.[48]

In 2014, Tenet ranked #229 in the annual Fortune 500 list of the largest American companies.[47] In March 2014, Tenet formed a partnership with the Yale New Haven Health System to create a healthcare delivery network in Connecticut.[49] 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.[50] Tenet launched MedPost Urgent Care in May 2014, which is a national network of urgent care centers.[10] Previously, Tenet's urgent care locations often took on the names of nearby Tenet hospitals. At the time of the rebranding, MedPost had 23 facilities, with six in Texas, and others in Arizona, California, Florida, Georgia, Mississippi, Missouri and Tennessee.[51][52] 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.[53] 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 was Tenet's 79th hospital and 19th in Texas at the time.[54][55]

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.[56] 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.[57]

On August 1, 2014 Tenet acquired Emanuel Medical Center,[58] a 209-bed hospital operated by the Swedish Evangelical Covenant Church located in Turlock, California,[59] bringing the number of Tenet's hospitals at the time to 80 nationwide.[58] 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.[60]

As of the fourth quarter 2014, Tenet had 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,[61] with its earnings topping $1.95 billion.[62] On May 7, 2015, the Tenet board of directors appointed Trevor Fetter, Tenet's then president and CEO, as chairman of the board.[63] In 2015, the company moved from No. 229 to No. 170 on the Fortune 500.[64]

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.[7] The June 2015 acquisition of USPI almost doubled Tenet's prior count of 210 outpatient centers.[43][60][65][66] Tenet also announced an agreement to acquire Aspen Healthcare in Great Britain.[7] 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.[6] Bill Wilcox remained CEO of USPI, and Kyle Burtnett of Tenet joined USPI as chief integration officer, among other roles. Through the deal, USPI retained its independent branding.[6]

Early in September 2015,[67][68] 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 the Carondelet Health Network.[67][68][69] The three hospitals' names remained unchanged, with close to 1,000 new beds added to the Tenet healthcare system as a result.[67] The acquisition of Carondelet Health Network raised the total number of Tenet's general acute care hospitals to 83.[68] On May 11, 2015, it was announced that the Tenet-operated Abrazo Health, acquired in 2013 as part of the Vanguard transaction, had been renamed Abrazo Community Health Network.[70]

After first announcing the deal in March 2015,[71] in January 2016 Tenet Healthcare closed a deal to form a joint venture[72] with the non-profit organization[73] Baylor Scott and White Health, with plans for the joint venture to own and operate a number of hospitals in North Texas.[72] The hospitals[72] were all rebranded under the Baylor name over the coming months:[74] Baylor Scott & White Medical Center — Centennial,[74] Baylor Scott & White Medical Center – White Rock,[75] Baylor Scott & White Medical Center – Lake Pointe,[76] and Baylor Scott & White Medical Center – Sunnyvale.[77]

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.[78] According to the lawsuit filed in 2014, four hospitals then owned by Tenet had collaborated in a "kickback" scheme with Clinica de la Mama to increase hospital referrals of Medicaid patients,[79] with two of Tenet's former subsidiaries admitting to "conspiring to defraud Medicaid."[79] 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."[79]

In 2015, Tenet announced the acquisition of Baptist Health System of Birmingham, Alabama. Tenet's own Brookwood Medical Center in Birmingham would be included in the merger. The merger was finalized in 2016 and the new subsidiary was renamed Brookwood Baptist Health.[80]

In September 2016, an agreement between Tenet and Humana Inc, a health insurance company based in Louisville, Kentucky, came to an end, putting Tenet's facilities and physicians out-of-network for patients with Humana insurance, including those covered through commercial plans, Medicare Advantage, Healthcare Marketplace Exchange, Medicaid and TRICARE.[81][82] A new agreement was reached in May 2017 and hospital outpatient centers and physicians returned to Humana Inc's network in June 2017.[83]

Tenet Healthcare announced that the sale of three Houston hospitals and other facilities to HCA Healthcare was finalized in August 2017. The transaction was reported at $750 million in proceeds.[84] In August 2017, Glenview Capital Management removed two of its representatives from the Tenet board[85] over strategy disagreements with the board.[86] In September 2017[87] there were "speculative" press reports[88] that Tenet was considering "strategic options" such as a sale.[87] In October 2017, the press reported that a sale was no longer being considered. Trevor Fetter stepped down as CEO in October 2017, and Ron Rittenmeyer was named CEO in addition to his position of executive chairman.[85] Tenet increased its ownership in USPI to 95 percent in April 2018.[89]

In August 2018, Tenet divested entirely from the United Kingdom.[90] In the United States in 2018, Tenet Healthcare sold the for-profit MacNeal Hospital, in Berwyn, Illinois, to the non-profit regional Roman Catholic Loyola Medicine.[91] In January 2019, Tenet Healthcare sold its three remaining Chicago-area for-profit hospitals to Los Angeles-based Pipeline Health, which is partially owned and operated by Eric E. Whitaker. The three hospitals in the sale were Louis A. Weiss Memorial Hospital, Chicago; Westlake Hospital, Melrose Park, Illinois; and West Suburban Medical Center, Oak Park, Illinois.[92][93] Then, in February 2019 Whitaker announced that Pipeline Health would close Westlake Hospital within five months, keeping the other two open.[94]

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.[109] In 1991, the federal government investigated the company for fraud and conspiracy.[110] In 1993, law enforcement raided company offices in an attempt to show that the company was defrauding patients and insurance companies.[111] In 1994, the company paid $2.5 million to settle lawsuits from 23 patients at its psychiatric hospitals.[112] 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.[113]

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.[114] 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.[115] In 2004, Tenet paid an additional $395 million to 769 patients to settle litigation for the unnecessary surgeries.[116] The scandal and subsequent federal investigation are described in the book Coronary: A True Story of Medicine Gone Awry by author Stephen Klaidman.[117][118][119]

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).[120][121][122] In September of that year, Tenet entered into a 5-year corporate integrity agreement with the U.S. Department of Health and Human Services.[29][30] That agreement expired on September 27, 2011.

In August 2005, Tenet-owned Memorial Medical Center in New Orleans, LA was struck by Hurricane Katrina. During and immediately following the storm, several hundred patients, visitors and staff sought medical care and shelter in the building. The hospital became surrounded by flood waters, which submersed the lower floors of the building, rendering the facility's emergency generators inoperable. Hospital staff were left to care for patients without electricity, sanitation, air conditioning, or adequate food and drinking water. The hospital was evacuated over the course of several days, during which time 45 patients died within the hospital building. It was alleged that staff intentionally hastened the death of several patients by administering lethal doses of sedatives and pain medication. In July 2006, Dr. Anna Pou and nurses Lori Budo and Cheri Landry were arrested after being charged by Louisiana Attorney General Charles Foti of second-degree murder in the deaths of four patients.[123] 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.[124] In June 2006, Tenet announced it planned to sell Memorial Medical Center and three other hospitals in the greater New Orleans area.[125] 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.[126][127]

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.[128]

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."[129] 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.[130]

In late 2019, the physician group, University Pediatrics announced that they were separating from the Wayne State University School of Medicine and instead joining the Central Michigan University.[131] In retaliation, Wayne State announced that they were creating their own physician group, Wayne Pediatrics and gave doctors who taught medicine at the university 30 days to switch over their affiliation to Wayne Pediatrics or lose their teaching privileges.[132] The group University Pediatrics has had an exclusive contract with the Detroit Medical Center and DMC's owner, Tenet Healthcare, decided that doctors from Wayne Pediatrics would lose their affiliation with the hospital and doctors with Wayne Pediatrics would not be able to treat or admit patients at the hospital.[133] In April 2020 Wayne State officials announced that they were taking up legal action against Tenet Healthcare.[134][135]