Tenet Healthcare

1969–1999

Tenet was first incorporated in 1969 by attorneys Richard Eamer, Leonard Cohen, and John Bedrosian, as National Medical Enterprises, (NME) and headquartered in Los Angeles. By 1975, NME owned, operated, and managed 23 hospitals and a home health care business. 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 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 operations into New Orleans, Louisiana, and Texas. After completing the acquisition, NME changed its name to Tenet Healthcare Corporation. In 1996, Tenet CEO Jeffrey Barbakow moved Tenet's headquarters from Santa Monica, California to Santa Barbara. Also in 1996, Tenet acquired OrNda, then the third-largest investor-owned hospital chain. In 1998, Tenet purchased eight Philadelphia hospitals owned by the bankrupt Allegheny Health, Education & Research Foundation for $345 million.

2000–2013

In 2002, one of Tenet's hospitals came under scrutiny for its surgical practices and another was investigated in a kickback scheme. 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 the 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 the company. Rebuilding 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 to Dallas. In 2006, Tenet agreed to pay $725 million to the Justice Department to settle allegations of unusually high Medicare payments to Tenet hospitals in 2000 to 2002. The company entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services which required them 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. As of 2018, Conifer served approximately 800 clients in the U.S. and processed $30 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. On July 24, 2019, Tenet announced it intended to spin off Conifer Health Solutions into an independent publicly traded company.

In May 2011, Tenet's board rejected a $7.3 billion takeover bid from Community Health Systems, in a deal which would have created the largest hospital company in the United States. 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 Omaha, Nebraska. In 2013, Tenet acquired Vanguard Health Systems, based in Nashville in a deal worth $4.3 billion. Through its acquisition of Vanguard, Tenet acquired 28 hospitals and 39 outpatient centers that served 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.

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, Texas 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. 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. In June 2014, Tenet acquired a majority interest in Texas Regional Medical Center, a 70-bed community hospital in Sunnyvale, Texas, east of 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 was Tenet's 79th hospital and 19th in Texas at the time.

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. That continued a trend of Tenet allowing a model of common ownership, where each acquired hospital has its own agreement conditions. The deal, and three others Tenet had planned in the Connecticut, unraveled when Tenet expressed concern with the conditions on the sale set by the state. The Waterbury hospital was ultimately purchased by Trinity Health of Livonia, Michigan.

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.

Tenet Healthcare Corporation employed, in 2021, approximately 110,000 people. Through its brands, subsidiaries, joint ventures, and partnerships with companies like United Surgical Partners International (USPI), as of September 30, 2019, Tenet operated 65 hospitals and approximately 500 other healthcare facilities. Tenet subsidiaries own or lease and operate a number of medical office buildings, all located on or near Tenet hospital campuses. Tenet subsidiaries operate free-standing and provider-based outpatient centers, including diagnostic imaging centers, ambulatory surgery centers, off-campus emergency departments, and urgent care centers.

Controversies

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 them 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 total $2.5 million to settle lawsuits from 23 patients at its psychiatric hospitals. Again in 1994, National Medical Enterprises settled fraud charges with the U.S. 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 five-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 the 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.

California Closures

In the mid-1990s, Tenet had a strategy of buying up community hospitals in Southern California in an effort to capitalize on rising insurance costs in the region. The company and former CEO Jeffrey Barbakow received scrutiny after Tenet began closing these community hospitals, inconsistently citing financial difficulties. The city of Pasadena, California, publicly attacked Tenet on numerous occasions after their buyout of the Oronda Health group in 1996. St. Luke Medical Center in Pasadena, at the time was one of only two general care community hospitals serving the city. Tenet was negatively criticized after numerous complaints accused the company of neglecting the facility after recent renovations. Tenet presented numerous inconsistencies in their quarterly reports as the company claimed that St. Luke was fiscally underperforming, leading Tenet to shutter the hospital in January 2002. Pasadena city officials expressed widespread anger at Barbakow and Tenet for the closure. Barbakow eventually received an undisclosed settlement and resigned from the company three months later.

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 overbilling Medicare claims during the 1990s. Financing the settlement, they sold 11 hospitals in four states, including Memorial Medical Center in New Orleans (see below). In September of 2006, Tenet entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services. That agreement expired on September 27, 2011.

Bribery

In October 2016, Tenet Healthcare and two of its subsidiaries agreed to pay $513 million to resolve allegations that they had defrauded the United States and had made use of a kickback scheme to gain patient referrals. The two subsidiaries pleaded guilty to conspiracy to defraud the United States and to using kickbacks and bribes to refer primarily female undocumented Hispanic patients towards the labor and delivery services of Tenet Healthcare.

Hurricane Katrina

In August 2005, Tenet-owned Memorial Medical Center in New Orleans 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 in 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. 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, Governor Bobby Jindal approved a bill passed by the Louisiana Legislature to reimburse Pou's legal fees, which were more than $450,000.