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Tenet Healthcare PACMAN activities
Mergers and takeovers of not for profit hospitals

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Tenet expanded its empire and secured regional dominance by merging or taking over not for profit community hospitals. It failed to honour its agreements and there was an angry community backlash.


Of course, medicine long ago ceased being the kind of idealized, saintly care and healing of the sick expressed by that old statue of St. Vincent, if indeed it ever was such a thing. But as we watch this era end, the difference between the old and the new is striking. If St. Vincent -- with its cross over the main door and its Gothic windows -- puts one in mind of a church, the new (Tenet's) medical center looks more like an upscale shopping mall. St. Vincent move reflects critical shift :: The face of health care growing more impersonal Worcester Telegram & Gazette April 5, 2000



The Early Years

Buying, Closing and Selling :: Citizens Fight Back

Regional Takeovers and Mergers

Buying again in 2007

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Tenet had put itself into a dominant position as the number two hospital operator after its 1994 settlement by buying, first American Medical International (AMI), and then OrNda Healthcare, both large competitors. It then set about increasing its negotiating leverage by buying up regional competitors.

This web page examines the implementation of Tenet's policy of securing regional dominance by buying or partnering with not for profit religious and community groups. When a company dominates in a region then insurance companies have no choice but to pay what the company demands if they want their members treated as the company has greater leverage. When a single insurer dominates in the region and there are multiple hospital owners then the insurer has leverage and can dictate what it will pay. The cost of health care has everything to do with leverage and very little to do with the standard of care, staffing or choice.

As with Tenet, hospital chains argued that the consolidations would cut costs and improve care. Instead, they appear to have improved the bottom lines of the chains, giving them more leverage to raise prices -- and fuel the recent surge in health costs.
Some merged hospitals have increased prices more than 20%, according to research by Northwestern University professor David Dranove. And a recent report sponsored by Blue Cross Blue Shield found that hospital spending climbs in lockstep with increased hospital consolidation.
Merged hospitals break vow to lower patient costs USA Today November 13, 2002

Once upon a time, insurers could drive down costs by using their leverage over a hospital industry with too many operators and too many beds. That changed with a consolidation that, in many markets, concentrated the business in the hands of three or four hospital companies, reducing the number of beds nationally by 80,000 since 1994.
Why GE Should / Shouldn't Go Into the Hospital Biz The Wall Street Journal November 20, 2002

Tenet's earlier growth strategy had been to seek leading positions in the markets it serves. This incorporated clustering facilities into integrated health-delivery systems, gaining operating efficiencies, and improving negotiating leverage with payors.
Tenet Healthcare Corp. Corporate Credit Rating B/Negative/B-3 Standard and Poor release <> October 17, 2005

Communities were distrustful and to secure approval under new Pacman laws Tenet was forced to make commitments and enter agreements that were not in its financial interests. To secure regional dominance Tenet aggressively neutralised the Federal Trade Commission (FTC) by taking their anti-competitive rulings to court and winning.

The new impersonal face of medicine was not welcomed by local communities. The early closure of much loved local hospitals serving local communities forced citizens into Tenet's other more distant hospitals. Communities concluded that Tenet had only purchased them to eliminate competition. Tenet's failure to meet its undertakings and agreements created outrage and angry communities mobilised. The FTC seized the opportunity presented by Tenet's price rises to show that its mergers were anti-competitive. It is investigating these mergers.

The page examines what actually happened in many local communities after Tenet took over their community hospitals.

Tent's efforts were very successful in making money but alienated whole communities who had no choice but to use its hospitals once it was dominant. Market forces failed again. That these hospitals ceased to be profitable when the 2002 scandal caused Tenet to abandon its outlier billing policy and its practice of price gouging the poor and pursuing them aggressively. Instead it agreed to give them concessions. Not for profit community hospitals were built in poorer areas to meet the needs of these communities. That they were no longer profitable suggests that their profitability depended on these strategies.

By 2007 Tenet had sold off about half of its hospitals, many of them previous community and church hospitals. It is interesting that many of the buyers have been community groups, not for profits and doctors. This seems to be a reversion to a past era, an era when these groups were not financially viable because they had no leverage. There are no indications that governments are planning to change the situation to allow these properly motivated groups to function in an economically viable manner.

Not only did Tenet lose leverage but the insurers who believed they had been defrauded by the company became more aggressive. They had consolidated by mergers and takeovers in order to increase their leverage.

At the same time the Federal Trade Commission, still smarting from Tenet's aggressive legal challenges and court victories stepped in to prevent and prohibit anti competitive practices and lucrative arrangements with doctors. These impacted further on Tenet's leverage and it lost billions of dollars.

Tenet Healthcare (THC), one of its hospitals, and a group of doctors have reached a deal with the Federal Trade Commission to settle charges of illegal price fixing. Regulators say the doctors` group, Piedmont Health Alliance, effectively eliminated competition among physicians in four counties in North Carolina, and that Tenet helped set up the group. The deal bars Tenet from entering into agreements among doctors in that area, and orders it to stop receiving payments based on the price-fixing scheme. Tenet says the settlement is not an admission that it broke the law, but a decision made in the best interest of the company, Jeff?
Nightly Business Report December 24, 2003

HOSPITALS look for ways to regain leverage in contract negotiations as consolidation, a national reach and a surprise ruling by the FTC give INSURERS the advantage-for now
READY TO RUMBLE Hospitals & Health Networks January 1, 2006

The Early Years

One of the first things Tenet and its CEO did after Tenet/NME's criminal plea, and forced sale of over half its empire in 1994 was to raise all the money it could from the sale of specialty hospitals and from bank loans. It used its teetering international division as collateral and then later sold it. It went on a wild takeover and merger spree aimed at synergies and control of regional markets. It bought AMI, AMH, and OrNda Healthcare making it the second largest hospital group behind the recently merged Columbia-HCA-Healthtrust giant. John T. Casey, 49, who had been AMI's president and chief operating office was given the job of targeting not for profits hospitals.

In addition, Casey will continue to provide his expertise to the company as an executive vice president, helping build alliances and other business arrangements with not-for-profit hospitals, an area the company has identified as a strong growth opportunity.

Softly softly does it

Columbia/HCA's aggressive and antisocial Pacman takeovers of community not for profit hospitals during 1995 and 1996 had alienated the country. Tenet capitalised on this and marketed a gentler and kinder community image. It successfully embarked on its own program of mergers, takeovers and joint ventures in community and university hospitals - sometimes taking over from Columbia/HCA, (renamed HCA after its 1997 scandal).

It set out to secure dominance in regional markets so that it would be in a position to dictate prices once its integrity agreement expired.
As in Australia a hospital company's success was all about securing leverage in negotiations with insurers. Tenet denies claims that it often bought hospitals in order to close them and remove competition. Its record of closures does not favour its position. Its hard market focused face is hidden from the community but can be seen by those who look at its statements to the market and its practices.

In 1997, Tenet purchased the only hospital in Artesia. The hospital, a major local employer, operated the only emergency room, intensive care, cardiac and childbirthing units in Artesia. Shortly after acquiring the hospital, Tenet announced it was going to close the hospital and transfer its services to other Tenet hospitals outside of Artesia. Risky Business: The Tenet Story* SEIU (Nurses Union) Research document Jan 1999

The news (hospital closures) is particularly noteworthy given the so-called kinder and gentler acquisition strategy of the Santa Barbara, Calif.-based company.

In July 1997, Tenet publicly downplayed the differences between for-profit and not-for-profit hospitals. The company joined the American Hospital Association and said it was open to novel ways of combining its hospitals with those in the not-for-profit sector.
In its first major downsizing in its four-year existence, Tenet Healthcare Corp. revealed plans last week to divest up to 20 of the chain's 129 hospitals to trim costs.
But even the kinder and gentler Tenet has to please its shareholders and make decisions based on the bottom line.
The chain is likely to dump hospitals that are in markets where it does not have a strong commitment or it is not a major player. Not-for-profits and financial companies could be likely buyers, said John Hindelong, a healthcare analyst.
After nearly four years of mergers and acquisitions, Tenet needs to focus on its most profitable holdings, he said.

Tenet's action highlights one of the major differences between for-profit and not-for-profit hospitals, said Linda Miller, president of Volunteer Trustees of Not-for-Profit Hospitals, an association of not-for-profit governing boards.

Not-for-profits have a responsibility to their communities, while for-profits must please their shareholders, she said.

Tenet shareholders have not been pleased with its financial performance.

Tenet has a consistent track record of consolidating its large-scale acquisitions. Since 1996, Tenet Healthcare has closed, sold or converted from acute care 44 hospitals. Merged, sold, converted From the SEIU web site Tenet Monitor Accessed Dec 2002

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Buying, Closing and Selling
Citizens Fight Back

In a full-page ad Sept. 23 in The Kansas City Star, the union (Service Employees International Union) alleged that Tenet closes hospitals, drives up prices and "buys and sells hospitals as if they were pork bellies."
Executives Leave Beleaguered Santa Barbara, Calif.-Based Tenet Healthcare. Ventura County Star November 8, 2002

Business philosophy

By 1999 and 2000 Tenet was quite open about its policy of securing regional market share and then raising prices. The marketplace saw nothing wrong in this, or in buying hospitals simply to close them and eliminate competition. Tenet was widely praised. One can debate whether a long-term strategy had been set in place as long ago as 1994, setting the scene for aggressive activity once the integrity restraints were lifted. The market admired Tenet's focus and aggression. Tenet was delighted when analysts used the term. Aggression is not a quality to be fostered when caring for the sick nor can it be marketed to local communities. Tenet could hardly tell them why it was buying their hospitals. It denied it planned to close them. Tenet had to live in two contradictory worlds if it was to succeed. (see Belief versus Reality in Reforming Health Care - pdf file).

But along the way, Tenet also has closed hospitals, including facilities in Philadelphia, St. Louis and New Orleans. In California, the company shuttered at least five hospitals and was involved in the closure of three others from 1995 to 2000, according to a study by UC Berkeley's School of Public Health. In the spring, Tenet closed St. Luke Medical Center, a 165-bed hospital in Pasadena. Closures Put Big Hospital Chains Under Microscope Health: An uproar in Marina del Rey reflects growing government and consumer pressure. LA Times August 22 2002

Buying not for profits

Citizens were alarmed by Columbia/HCA's Pacman activities. Most states had passed "Pacman" laws to protect citizens and the not for profit system. Tenet now had to satisfy citizen's groups and agree to conditions imposed by attorney generals. None of these were in the interest of its shareholders but it had no choice if it was to compete.

Knocking out the Federal Trade Commission (FTC)

The iron fist remained within the velvet glove. The Federal Trade Commission's job, like Australia's ACCC was to forbid mergers and takeovers that would limit competition. They blocked multiple hospital takeovers and mergers with not for profits. Tenet was among those, which routinely appealed these decisions to the courts. They almost invariably overturned the decision. The FTC was effectively emasculated. In the legal system the rights of the individual carry greater weight than the interests of the community.

Community amnesia

When selling to Tenet all but a few community groups had forgotten Tenet's dishonest past and the admission of one of its founders that it had no qualms about a lack of integrity in its public statements. It "sang to the choir" when this was in its interest. It soon became apparent that Tenet could still not be trusted.

Tenet fails to meet its undertakings

Groups in the community became concerned about repeated failures to meet the spirit if not the exact terms of agreements and undertakings. The community were angered by the closure of hospitals which provided a valuable service to local communities - simply because they did not make enough profit to satisfy Tenet's institutional shareholders or fit its wider corporate strategy. They were alarmed by the rising costs of health care.

Corporate blindness

Tenet seemed to be immune to the rising tide of anger in the community and the growing concerns of the FTC. Resentment was fanned by its rising profits, by the excessive remuneration and bonuses given to its senior executives, by reports of poor care, and by its miserly treatment of its labour force, particularly nurses. The community pressured attorney generals more strongly to act and the FTC commenced a review of the consequences of Tenet's mergers and takeovers. This all came to a head at the end of 2002 compounding Tenet's problems.

Some of those same critics questioned Tenet's staying power in meeting its claims and its commitment to serving local communities.

"They have not kept their promises," said Laurie Sobel, staff attorney for the San Francisco office of Consumers Union. "Some of this is probably to deflect criticism."
Chain says capital improvements are needed to meet needs of aging baby boomers. LA Times August 24 2002

Tenet also is not likely to continue to win market share because its local not-for-profit competitors appear poised to resist its further encroachments on their turf, he added.
Tenet's stock takes dive as profit outlook suffers Modern Healthcare November 4, 2002

The FTC fights back

The Federal Trades Commission seized the opportunity presented by the 2002 outcry about prices and corporate misconduct to revisit some of the deals where they had been overruled by the courts to see what the impact had been on competition and prices. Not surprisingly they chose Tenet to investigate. Tenet sold the two hospitals in 2003 and the FTC seems to have dropped the action.

Although hospitals have been changing hands and closing for some years, federal regulators are stepping up their examination of past hospital mergers and acquisitions for their effect on prices and consumers. - - - there is a growing body of academic research that suggests big hospital mergers have not been good for patients. He said that when hospital companies buy facilities and later close them, it also can create antitrust problems.

"When they eliminate competitors, that could lead to higher prices," Cowie said, although he declined to comment about specific companies.
Closures Put Big Hospital Chains Under Microscope Health: An uproar in Marina del Rey reflects growing government and consumer pressure. LA Times August 22 2002

The Federal Trade Commission, having vowed to step up its scrutiny of completed hospital mergers for potential anticompetitive behavior, is now demanding documents on several past hospital deals.

The paper goes on to say that the FTC's recent record in opposing hospital mergers has been abysmal. Together, federal and state officials have brought seven antitrust actions seeking to block hospital mergers since 1994, and have lost every case. The string of defeats may have encouraged many hospital systems to push aggressively with merger plans.
One tough decision is whether to bring a complaint in a case it already has lost. One such possibility would be in Poplar Bluff, Mo., where the FTC in 1997 opposed a merger of two hospitals, now both owned by Tenet Healthcare Corp., Santa Barbara, Calif. The FTC ultimately lost the case in the U.S. Circuit Court of Appeals in St. Louis. Following that merger, disgruntled physicians began plans to build another hospital in Poplar Bluff.
FTC Seeks Documentation On Past Hospital Mergers Wall Street Journal September 26, 2002
But the industry's growing record of unkept promises has persuaded the FTC to take up the cause again.

Some merged hospitals have increased prices more than 20%, according to research by Northwestern University professor David Dranove. And a recent report sponsored by Blue Cross Blue Shield found that hospital spending climbs in lockstep with increased hospital consolidation.

The findings don't surprise the FTC, which tried to block Tenet's acquisition of the Poplar Bluff hospital. The FTC cited company documents in which Tenet told its board that the buyout would boost its "negotiating leverage" and produce substantial returns.
Merged hospitals break vow to lower patient costs USA Today November 13, 2002


Sales to raise capital 2003 to 2006

When the scandal erupted and its profits crashed in late 2002 Tenet was forced to sell another 14 hospitals, some profitable. It needed capital to pay down debt and probably for future fraud settlements. A prime criterion in selecting hospitals for sale seems to have been their lesser contribution to Tenet's negotiating clout, not a sign that it was abandoning its past policies. As Tenet's losses mounted over the years it was forced to sell more and more hospitals. It sold or closed over 50 of its 114 hospitals and by the end of 2006 was left with only about 60. It did this in groups of 14, 27 and 11.

Community, church and not for profit hospitals are normally located in less affluent communities where they serve those in need. Tenet had acquired many of these. It is likely that when Tenet was forced to abandon the inflated outlier payments and the aggressive gouging of the uninsured, these hospitals suffered the most and became unprofitable. In any event many of them were sold. It is interesting that many were bought up by local doctors, others by not for profits and local authorities.

There was some concern about the conflict of interest involved in doctors owning hospitals and the possibility that they would turn the hospitals into specialist facilities supplying only profitable high tech care, leaving others to treat the unprofitable. The chances that they will be as bad as Tenet are hopefully remote!

Although sources said these 14 hospitals are by and large profitable, they generally lag behind the overall earnings performance of the Tenet chain and in some cases lack the negotiating clout with insurers that the company has in key markets such as Southern California. Tenet to Close or Sell 14 Hospitals in an Overhaul :: For-profit chain says it will lay off some employees as it cuts costs and boosts efficiency. LA Times March 19, 2003
As many as 15 doctor groups are vying for stakes in some of the California hospitals that Tenet Healthcare Corp. plans to sell, raising concerns that the physicians' financial motives may conflict with patient care.
Doctor-owned hospitals have all but disappeared nationally since the Medicare Act in 1965 prompted many to sell out to for-profit operators. And the interest by doctors in the high-profile Tenet sell-off is likely to renew the debate over whether the benefits of doctor-owned hospitals are worth the potential conflicts of interest.

Federal laws prohibit a doctor from being paid for referrals and in most cases from referring Medicare and Medicaid patients to healthcare providers and services in which the physician has a financial interest.- - - - - But the laws have an exemption that allows a doctor to refer patients to hospitals where the physician is a part-owner.
Other critics worry that doctors, in order to make a profit, might turn all-purpose hospitals into specialized orthopedic surgery or cardiac care boutiques.

"The concern is that they will close the trauma centers and emergency rooms and turn these hospitals into specialty clinics where they can be assured very lucrative treatments," said Jerry Flanagan, a spokesman for the Foundation for Taxpayer and Consumer Rights.
"If you are buying a Tenet hospital and think you are going to run it at a better margin than Tenet, then you are dreaming," said Joshua A. Nemzoff, a New Hope, Pa., healthcare consultant who doesn't represent any bidders for the Tenet properties. "There are not too many hospital chains that can run a hospital better than Tenet, and by better I mean at a higher margin."

Doctors' Hospital Bids Raise Ethical Worries : As physicians seek to buy Tenet holdings, critics wonder whether profit would come before patients. LA Times April 5, 2004

 Tenet's Legacy and the Not For Profit Hospitals

For profit thinking and market ideology are now all pervasive in the USA. Not for profits are searching for and paying massive salaries and bonuses to for profit trained hospital executives in an effort to turn their services into profitable enterprises.

Tenet made money and not for profits did not. Success was equated with profitability rather than humanitarian service. Even religious not for profits saw the advantage of employing profit focused managers from the corporate sector and changing their culture to a commercial one.

In a particularly bizarre development the Sisters of Charity brought in 5 of Tenet's managers in the midst of Tenet's scandal and sought to replicate its culture. Nothing could reflect the discordant impact of market place ideology on society more than this.

The overhaul started in February when the Daughters of Charity Health System brought in Gustavo Valdespino, a senior vice president at Tenet, to be chief executive. It was recently completed with the appointment of the last of six senior vice presidents, including another four from Tenet.
"A lot of things we are working on are pure corporate culture," said St. Vincent business development director Ron Yukelson, who also came from Tenet. "The senior management team is clearly focused on turning the hospital's situation around."

Management Overhaul Los Angeles Business Journal August 2, 2004

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Regional Takeovers and Mergers

To really understand how these forces played themselves out we need to look at what happened in the different regions across the USA. The press reports describing these events provide the best insights. The describe the way discontent surfaced at many places across the country.

University Affiliations

Tenet has over the years set up affiliations and joint activities with academic medicine taking over or running teaching hospitals. This gave them contact and influence on professional leaders and future doctors.

During the period of their earlier 1990's scandal they had close relationships with universities and their founder Richard Eamer donated vast sums to universities in California. Vast complexes were named after him (eg Richard Eamer Pavilion). NME operated "flagship hospitals" which it used to boost its credibility and market its expertise. It often made its money elsewhere.

Cleveland Clinic:- Tenet has continued these associations and partnerships. They are for instance heavily involved with the Cleveland Clinic, a deal I attempted to influence by providing material to doctors. It is interesting that the clinic is now backing away from Tenet and is planning to exercise its option to buy Tenet out in its Florida hospital.

Tenet will also have to work out its situation with the Cleveland Clinic in Weston. The Ohio-based not-for-profit announced plans on Jan. 24 to sell its 83-bed Naples hospital to Health Management Associates of Naples. That has led some industry experts to question Cleveland Clinic's future in Florida.
More sales by Tenet expected The Business Journal of South Florida February 3, 2006

The Cleveland Clinic said it intends to exercise its right to buy out the interest of Tenet Healthcare Corp., Dallas, in 150-bed Cleveland Clinic Hospital, Weston, Fla. Tenet owns 51% of the hospital and is responsible for its operations.
Cleveland Clinic to buy hospital, turmoil continues Modern Healthcare February 2006

The company said it sold its 51 percent interest in the Cleveland Clinic Hospital, a 150-bed facility in Weston, Fla., to the Cleveland Clinic.

Tenet Healthcare sells 4 hospitals Business Week October 2, 2006

Press reports of conflicts of interest and forced staff departures at this time suggest that Tenet might have had an adverse influence on management and doctors.

Meanwhile, the clinic is preparing to tighten its conflict-of-interest rules following criticism over the business interests of Chief Executive Officer Toby Cosgrove, the Wall Street Journal reported. Cosgrove, a heart surgeon, until recently was a partner in Foundation Medical Partners, a venture capital fund created by the clinic. The fund also owns an interest in a medical-device company that does business with the clinic. According to a law firm hired by the clinic to review the matter, Cosgrove did not fully comply with disclosure policies, the Journal reported.

And in other news, prominent cardiologist Eric Topol will leave the clinic about two months after signing a new one-year contract, according to Crain's Cleveland Business, a sister publication of Modern Healthcare. The departure comes after Topol testified in December 2005 at the first trial involving Vioxx, suggesting that the controversial painkiller made by Merck & Co. posed significant risks. Within days, the clinic eliminated Topol's position as provost and chief academic officer at the Cleveland Clinic Lerner College of Medicine at Case Western Reserve University. Topol has said the demotion resulted from his criticism of Merck and Vioxx. Clinic officials have said that was not the case. At deadline, neither Topol nor the clinic could be reached for comment.
Cleveland Clinic to buy hospital, turmoil continues Modern Healthcare February 2006

Missouri:- The community and local medical staff torpedoed a 1995 joint venture project by Tenet and the local university in Missouri. Those involved contrasted Tenet's claim to ethical reform with the presence of the same people on its board, with allegations of poor staffing, dishonesty, and a failure to meet undertakings at neighbouring Tenet facilities. They reached the obvious conclusion. What happened is described in my 1996 review of NME's 1990's scandal (5.18)

The University of Southern California has had a long association with Tenet, which it is now seeking to terminate.

The University of Southern California said it has filed a lawsuit seeking to force a subsidiary of Tenet Healthcare Corp., Dallas, to give up ownership and control of 269-bed USC University Hospital, Los Angeles, after more than 20 years of partnership. The lawsuit alleges that Tenet's reputation has been tarnished by various lawsuits and investigations of the company over the past four years, and that the monetary settlements Tenet has agreed to pay to resolve those legal problems have sapped the company's financial strength. USC contends that these events have substantially altered Tenet's ability to operate the hospital, which is grounds for terminating the agreement and forcing Tenet to give up its ownership interest.
Calif. university sues to strip hospital from Tenet Modern Healthcare August 22, 2006


One of Tenet's largest not for profit takeovers occurred when 13 hospital not for profit Allegheny Health, Education and Research Foundation (AHERF) system entered bankruptcy in 1998. It sold 8 Philadelphia hospitals to Tenet. This gave Tenet a substantial market share in this region.

AHERF sold four other hospitals in Pittsburg to a not for profit group. Tenet objected strongly because it had been denied the right to bid for the hospitals and so increase its market share. It is likely that this is exactly why the community group did it this way.

Tenet also got involved and went to court unsuccessfully in an acrimonious dispute about a breech of the agreement. A clause related to the rights of doctors to move their allegiance from one hospital to another and to hospital's doctor recruitment practices.

What is disturbing about the reports on this is that there is nothing to suggest that anyone saw anything wrong with including in commercial agreement clauses which in some way restricted or controlled the way in which doctors supported hospitals or referred their patients. This impacts adversely on their duty to act in the best interests of their patients.

Allegheny was not in a position to set too many conditions. Tenet promptly focused on complicated and sicker patients, pushed up its prices, closed City Avenue Hospital, and rapidly turned the hospitals' losses into profits. The different responses of academic analysts and financial advisers to Tenet's claims is revealing (see extracts).

By August 2002 Tenet claimed a miraculous turn around. It increased market share by buying another competing hospital and closing another of the original purchases.

Tenet Healthcare, the for-profit company that bought the Allegheny Health, Education and Research Foundation's eight Philadelphia hospitals last year, complained in a bankruptcy court document made public yesterday that it has been denied an opportunity to make a bid for AHERF's hospitals here.

David R. Mayeux, an executive vice president with Tenet Healthcare, wrote in a letter to AHERF's trustee that the California company might like to purchase Allegheny General, Forbes Health System, Canonsburg Hospital and Allegheny Valley Hospital. The four foundation hospitals were not included in AHERF's July bankruptcy filing.

But for-profit companies are not being given access to financial information about the hospitals, Mayeux said, and he asked AHERF's trustee, William J. Scharffenberger, to alter the sale process.
FOR-PROFIT CHAIN BLASTS AHERF RULES FOR BIDDING Pittsburgh Post-Gazette January 16, 1999

Children's Hospital of Philadelphia scored a victory against Tenet Healthcare Corp. in a nasty legal fight over the hiring of two doctors from a Tenet hospital in Philadelphia last year

The report prompted praise within the health-care community that Tenet could so quickly turn around a group of hospitals that had been losing up to $1 million a day.
Tenet's purchase of the former Allegheny health system hospitals was the first major foray of a for-profit hospital company into this region.
You need to be cautious when the financial results are congruent with what management wants to project," he
(Tom Getzen, a professor of health management at Temple University) said. "But my initial assessment is that the hospitals are better-managed, and with better management they are profitable."
"Every one of us who was looking at those facilities three years ago did not think it was a salvageable situation," Nemzoff
(head of a hospital financial advisory firm) said. "Tenet knows what it is doing and they are very, very good at it. They came in and fixed something that everybody thought was unfixable." Tenet puts 5 hospitals in the black Philadelphia INQUIRER May 31, 2001

Tenet Healthcare Corp., Santa Barbara, Calif., signed a letter of intent to buy 129-bed Roxborough Memorial Hospital, Philadelphia, signaling the for-profit hospital chain’s readiness to expand its seven-hospital Philadelphia operations.- - - . The hospitals are for the most part focused on high-end care. "We are now in a position where we are looking for growth opportunities for the system among community hospitals that would be referral sources," Anderson said.
Tenet in talks to expand Philadelphia network Modern Healthcare August 21, 2002

Tenet Healthcare Corporation (NYSE:THC) announced today - - - the acquisition of Roxborough Memorial Hospital, a 125-bed hospital that has served the Roxborough community of Philadelphia for 112 years. In addition, Tenet pledged to continue to operate the 100-year-old School of Nursing located on the hospital campus.
Tenet Completes Acquisition of Roxborough Memorial Hospital BUSINESS WIRE December 18, 2002

After the exposure of Tenets outlier scheme for gaming Medicare and the allegations of kickbacks, profitability plummeted and these hospitals were losing money. Tenet was soon closing hospitals again. A community group assisted by California's Julie Inouye and her We Cahre group fought back after Tenet prematurely started stripping the hospital of equipment and directing ambulances away from the hospital. A group of doctors supported by the government and the university purchased the hospital.

The 153-year-old Medical College of Pennsylvania Hospital, the nation's first medical college for women, will close next spring, its owner said Thursday.
The hospital, which Tenet bought in 1998, provides general and psychiatric services and is also used by Drexel University to teach medical students.

It began in 1850 as the nation's first medical college for women, and started admitting men in 1970
Tenet to Shut 153 - Year - Old Phila. Hospital The New York Times December 19, 2003

Tenet Healthcare was welcomed as a white knight - - in late 1998 - - - - - . Five years later, the company's ride to the rescue has lost some of its luster.

Battered by financial problems of its own, Tenet was unable to save City Avenue Hospital, which closed in 2000. Parkview Hospital shut its doors in September after an attempt to sell it failed. A third medical center, Elkins Park Hospital, was spared in November only when a buyer was found.

Now, another planned shut down has consumed more of the reservoir of good will.
A group of doctors and hospital employees has filed a lawsuit attempting to block the closure, planned for March 31, and a judge on Thursday extended an order barring Tenet from taking any steps to shut the hospital down until a hearing in late February.
MCP trauma nurse Ginny Holzworth said the hospital's staff viewed Tenet as a savior when it arrived five years ago with the slogan 'Let the healing begin,' but now calls the company "a cancer that we have let into our city."

Tenet's rescue efforts fall short in Philadelphia The Associated Press January 9, 2004

Gerald K. Schrom, an attorney for the MCP group, opened the proceedings by raising pictures of empty rooms that he said had been stripped of computer equipment by Tenet. He and others hailed the order for keeping alive the group's quest to save the hospital.
Pennsylvania Gov. Rendell has also been active, holding two conference calls and several meetings on the closure. The governor is scheduled to meet Monday in Harrisburg with Tenet officials.

Philadelphia Councilman Michael Nutter, who has been highly critical of the closure, said the city could use considerable leverage on Tenet if it chose. The city annually forgives about $4.8 million in real estate taxes from Tenet, which received the breaks when it bought eight bankrupt hospitals, including MCP, in late 1998.
While some Drexel doctors are fighting to save MCP, the medical school is not. "We've accepted [the closing] as a business decision at this point," spokeswoman Linda Roth said. "We're also watching the situation. If it changes, then we have to go with that."

Further barriers on MCP closing: A Phila. judge has restricted Tenet from hastening the hospital's shutdown and will hear an advocacy suit Feb. 19. The Philadelphia Inquirer January 9, 2004

Meanwhile, a judge in Philadelphia's Common Pleas Court ruled that Tenet officials improperly diverted ambulances from 379-bed Medical College of Pennsylvania Hospital, Philadelphia.
Common Pleas Court Judge Matthew Carrafiello ruled that hospital officials didn't follow their own policies and procedures regarding ambulance diversions, said Gerard Schrom, an attorney representing the Save Medical College of Pennsylvania Hospital Coalition. The coalition contends Tenet violated Carrafiello's earlier order that no actions be taken to close the hospital while the lawsuit is pending, Schrom said.
New doc probe for Tenet, ongoing Pa. hospital suit Modern Healthcare's Daily Dose Jan. 23, 2004
Tenet Healthcare Corp. and Pennsylvania reached an agreement that will keep Tenet's 369-bed Medical College of Pennsylvania Hospital open until June 30 -- three months later than Tenet's planned closure date -- while Temple University Health System emerged as a potential buyer.
Tenet to keep Pa. hospital open through June Modern Healthcare's Daily Dose Feb. 20, 2004
Physicians at the Medical College of Pennsylvania will run the associated hospital as a not-for-profit corporation under a plan unveiled by Pennsylvania Gov. Edward Rendell and U.S. Sen. Arlen Specter (R-Pa.). Pa. brokers doctors' takeover of Tenet hospital Modern healthcare May 17, 2004
Tenet Healthcare Corp. and Pennsylvania Gov. Edward Rendell have brokered a deal under which the Philadelphia-based Medical College of Pennsylvania Hospital, slated to close July 30, will be sold for $1 to a not-for-profit corporation created by the state. Tenet will transfer non-real estate assets, including most hospital equipment, to a new not-for-profit hospital organization, East Falls Hospital System, formed by cardiologist Nancy Pickering.
Dispute over Tenet hospital ends with new owner Modern Healthcare July 29, 2004


The takeover of Columbia/HCA's 80% stake in Massachusetts' once not for profit MetroWest hospitals in Framingham and Natick illustrates the way in which the community and Auditor General were able to vet purchasers and negotiate conditions and restrictions. The community found its 20% stake gave it little say in running the hospitals and it sold this to Tenet.

Tenet Healthcare Corp. has signed a deal with community groups that should speed the California company's takeover of MetroWest Medical Center's Framingham and Natick hospitals.

The agreement satisfies concerns raised by the groups, which have considerable influence because state regulators can consider community wishes when deciding whether to permit the transfer of a hospital license. The sale relies on the transfer of the license.
The deal likely will lead the state Department of Public Health to permit the license transfer to Tenet from Columbia-HCA HealthCare Corp. after a hearing later this month.
Tenet reaches deal with groups over MetroWest The Boston Herald January 9, 1999

The acquisition results from more than a year of negotiation and discussion among Tenet, Columbia/HCA and members of the communities served by the hospitals
Among specific commitments made by Tenet in the final agreement are:
  • Extension of the original Columbia/HCA commitments for continuation of emergency room services and medical/surgical services at both campuses for at least another three years.
  • Maintenance of the existing level of free care for the indigent.
  • Enhancement of interpreter services for those who speak Russian, Portuguese and Spanish.
  • Expansion of physician and community input on the Medical Center board of directors and on hospital advisory boards.
  • Commitment to spend a minimum of $ 16.1 million in routine maintenance and capital improvements and an additional $ 6 million to $ 8 million on special capital projects to be identified.
  • Initiation of a community needs assessment to guide the Medical Center in making decisions about services.

Tenet Completes Acquisition of Majority Stake in MetroWest Medical Center Business Wire March 8, 1999

As the minority owner, MetroWest Health had the right to appoint six members to the 12-member board of directors, veto CEO and CFO choices and the right of first refusal on the medical center's sale until April 2006.

Even with those rights, MetroWest Health was a shell of its former self. It did not influence hospital operations, make budget decisions or strategic plans. It could not override Tenet's decisions to cut programs based on profitability.
To save itself
(after its fraud), Columbia/HCA put the medical center on the market. In 1999 it sold 79.9 percent share to Tenet for $75.1 million and exited MetroWest with as big a bang as it entered.

Tenet picked up Columbia's baggage and committed to stand by original promises made to the community, including maintaining care for the indigent and enhancing access for non-English speaking patients. An ambulatory surgery center was also part of the deal but has yet to be built by either owner.
"I think history has borne out the correctness of my opinion," said Dr. Relman, a staunch opponent of for-profit medicine. "It remains to be seen what's going to happen to Tenet. The community will now be forced to rely on its services from a hospital teetering on the brink of disaster."
In addition to the $20.2 million from the sale of the remaining share, another $26 million in hospital-related assets is required to be transferred to the foundation by court order.
"They have been swindled by the hospital corporation," he
(Relman) said. "They've sold their birthright. It will not nearly make up for what they have lost in public services." Charities pull hard at the purse strings Metrowest Daily News July 6, 2003

Worcester, Massachusetts

As part of a not for profit takeover Tenet acquired the not for profit St Vincent's in Worcester and agreed to build a new Worcester Medical Center. It entered into the usual community agreements.

There were major problems in the staffing of St Vincent's hospital, in particular Tenet's insistence on mandatory overtime and the right to require nurses to jeopardise care by forcing them to work two consecutive shifts - 16 hours at a stretch. This was a way of reducing staffing while still coping with busy periods. The nurses refused. A long and protracted strike was strongly supported by the community, by other unions, and by state and federal politicians. The strike focused attention on Tenet's failure to meet its promised staffing commitments and its disingenuous attempt to claim that it had. There is
more about the strike on another page.

The City Council's Commerce and Development Committee will consider decertifying the $40.5 million tax relief agreement for the new Worcester Medical Center.

The City Council last night unanimously asked the committee to hold the hearings, after several councilors said they were disappointed and frustrated by the number of jobs that were cut or privatized at St. Vincent Hospital before the hospital moved into its new downtown center earlier this month.

They said St. Vincent Hospital officials never indicated during their tax increment financing negotiations with the city that there would be such employment cutbacks.

Nine of the 11 city councilors co-sponsored the order requesting the TIF decertification hearings.
"Departments have been cut, some functions have been outsourced and employees have been removed," said Mayor Raymond V. Mariano, who led the call for the public hearings. "This is not what the people who voted for this (TIF) expected. They expected real jobs. What has happened is most disappointing."
Council plans hearings on medical center TIF :: Panel to weigh TIF decertification Worcester Telegram & Gazette April 26, 2000

(In response to the figures supplied by the hospital) City councilors also have challenged the inclusion of privatized or outsourced positions in the total job count. There are 264 such workers, Mr. Maher (Tenet hospital administrator) said.

The tax agreement does not specify that those people cannot be counted, he said.

"They work in the building, so I counted them," Mr. Maher said.
Mayor Raymond V. Mariano said yesterday that the council has been asking for such detailed information for two years without success. That has forced the council to pursue a more formal investigation, he said.

"We have asked for this data, and they have been reluctant to give it to us," he said. "With each group that they have downsized or outsourced, we've become increasingly frustrated. So now we are going to ask tough questions."
Medical center chief welcomes record review for TIF compliance :: TIF compliance is questioned Worcester Telegram & Gazette April 27, 2000

Rode Island

Rode Island health services are closely linked to neighbouring Massachusetts. It has been largely the preserve of the not for profits. When Columbia/HCA spooked the community in 1995-6 strict laws were introduced closely vetting and restricting the takeovers and services in which for profit groups were involved. HealthSouth tried to ignore them and was stopped, It is clear that they proved too restrictive for Tenet and it backed out of a 1999 purchase.

"After nearly a year of review by the Attorney General, this transaction was facing still more months of scrutiny with no assurance of final approval," said William L. Bradley, Tenet's senior vice president of operations.
"The onerous process of complying with Rhode Island's Hospital Conversions Act of 1998 and the change in the hospital's financial position during the review period were major factors in the decision to discontinue the purchase and sale effort
. Tenet, Landmark End Plans for Purchase of Hospital Business Wire January 22, 1999


In 2002 Tenet bid for the financially troubled Baptist Health System group running 5 hospitals in Texas. The community group, Consejo formed by Forbes to fight the exploitation of the uninsured Latino's had recently moved their focus from California to Texas. They rallied the local uninsured to protest about the sale to Tenet. Doctors also objected. The hospitals were sold to a smaller group.

Now, at the same time that Tenet is teaming with Christus Santa Rosa to try and acquire the Baptist Health System locally, the founder of that advocacy group says his organization has moved its focus to Texas -- where Tenet could again come under legal attack.
In February, with the help of Consejo, a group of patients brought seven lawsuits against Tenet in California. Three more suits have been filed since then, according to Forbes.
Baptist suitor in sights of litigious Calif. Group :: Tenet accused of overcharging Hispanics American City Business Journals Inc. June 7, 2002

This summer Tenet and a partner lost a bid to acquire five hospitals operated by Baptist Health System of San Antonio. Although executives of Baptist Health said only that they had a better offer elsewhere, a Latino advocacy group had lobbied against the Tenet deal, as did a local doctors group that expressed worries about a cut in services.
Closures Put Big Hospital Chains Under Microscope Health: An uproar in Marina del Rey reflects growing government and consumer pressure. LA Times August 22 2002

Top executives at religious, not-for-profit health systems might want to consider all their constituencies--along with the potential consequences--before moving ahead on a merger with an investor-owned partner.

Demonstrating the power of religion and the worldly might of physicians, two key constituencies coalesced earlier this month to force a turnaround at Baptist Health System, which scuttled a planned partnership with for-profit Triad Hospitals and sacked the chief executive who crafted the controversial deal. - - - - - - - - triggered by protests from physicians, hospital employees and parishioners demanding that Baptist remain a faith-based system under local control.
''Board members asked if it would be possible to do a joint venture with Triad and still have control,'' Nemzoff (hospital consultant hired as an adviser) said. ''I said, 'Absolutely not--no one's going to come in, assume debt and assume responsibility for running this system and then not have control.''
The hasty retreat from the deal with Triad, which owns or operates 49 hospitals, also may illustrate the disillusionment in some quarters of the healthcare industry with investor-owned operators.

Healthcare hath no fury; Power of religion and might of physicians join forces to prevent joint venture of faith-based Baptist Health, for-profit Triad Hospitals Modern Healthcare Jul 21, 2003

In Dallas Tenet had operated two hospitals leased from Metrocrest for 25 years. Metrowest has decided to terminate the agreement.

Tenet Healthcare Corp., Dallas, will lose its lease on the two hospitals owned by Metrocrest Hospital Authority, Farmers Branch, Texas, next year. Metrocrest said it has agreed to form a partnership with Hospital Partners of America, Charlotte, N.C., to run the hospitals. Tenet operates 114-bed RHD Memorial Medical Center, Dallas, and 207-bed Trinity Medical Center, Carrollton, under a 25-year lease that expires in August 2007.
Dallas hospital authority won't renew Tenet lease Modern Healthcare August 25, 2006

Poplar Bluff, Missouri

The Federal Trade Commission selected the not for profit purchase of two hospitals in Poplar Bluff to focus their inquiry into Tenet's practices. They had ruled against the purchase because it eliminated competition. This was one of the instances where Tenet had successfully appealed to the court to overturn the FTC's ruling. These and other takeovers were the key to Tenet's market dominance and its ability to dictate exorbitant prices. Tenet promptly decided to sell the hospitals and it seems that the investigation was abandoned.

Tenet Healthcare Corp., Santa Barbara, Calif., said the Federal Trade Commission has subpoenaed documents related to Tenet's consolidation of the only two private hospitals in Poplar Bluff, Mo.
The FTC attempted to block Tenet from buying the hospitals on antitrust grounds, and the government won a district court ruling in its favor; however, the 8th U.S. Circuit Court of Appeals, St. Louis, overturned the decision in 1999, allowing the merger to be completed.
FTC subpoenas Tenet regarding Mo. hospitals Modern Healthcare October 5, 2002

As part of a broad inquiry into the impact of hospital mergers, federal regulators are seeking information - - - (This was) one of several instances in which courts have rebuffed the agency. FTC Opens Inquiry Into Hospital Merger Excerpted from the New York Times November 6, 2002

The divesture of Tenet's Missouri hospitals also could help the company resolve an antitrust investigation by the federal government.
Tenet to Close or Sell 14 Hospitals in an Overhaul :: For-profit chain says it will lay off some employees as it cuts costs and boosts efficiency. LA Times March 19, 2003

Marina del Rey, California

The small not for profit group, Sisters of St. Joseph of Carondelet did not have the market share needed to negotiate prices with powerful HMOs and were therefore no longer able to compete. Even though studies have shown that these religious and community groups staff better, serve the community of which they are a part better, and provide superior care this has been the fate of large numbers of hospitals. They fall into the hands of ruthless groups like Tenet and HCA.

Tenet had purchased the sister's two hospitals in Marina del Rey in December 2001 subject to a set of requirements that it agreed to. It was surprised by the violent community response when it tried to close the Daniel Freeman Marina Hospital in 2002. The hospital was situated on very valuable land close to the Los Angeles Airport. It was also an area that required hospital services.

Julie Inouye, the wife of a physician at the hospital, led incensed individuals. Tenet had not fulfilled the agreed requirements in making the decision to close the hospital.

The attorney general agreed. He commenced court proceedings, which forced Tenet to restaff and reopen the hospital. This proved a costly exercise and severely damaged Tenet's credibility at a critical time. In a desperate attempt to reclaim its kindly image it agreed not to close the hospital even after it had fulfilled its agreed conditions. It had alienated the community and paid US $500,000.

Julie Inouye became a focal point for the collection of information and a battle against Tenet's practices in regard to community hospitals. Her organisation assisted other hospitals in their battles. Her web site address is There is a large amount of information on this site.

California Attorney General Bill Lockyer wants more proof that Tenet Healthcare Corp., Santa Barbara, Calif., is living up to the promises it made when buying 153-bed Daniel Freeman Marina Hospital, Marina del Rey, Calif., - - - Tenet has plans to close the Marina emergency room as of July 22, but in a letter dated July 3, Deputy Attorney General Mark Urban wrote, "Tenet cannot close either Marina or its emergency room, because it has not complied" with two of the conditions imposed on the sale by the attorney general. Calif. questions Tenet’s hospital closure plan Modern Healthcare July 9 2002

When Tenet Healthcare Corp. sought to close Daniel Freeman Marina Hospital shortly after buying it from a Catholic order of nuns, the giant hospital company never imagined the firestorm that would ensue over such a small, underused facility.

Protests flared from Marina del Rey residents, labor unions, consumer groups and politicians in Sacramento and Washington. The California attorney general accused Tenet of breaking promises it made in December when buying Daniel Freeman. And a Superior Court judge not only thwarted Tenet's plan to shutter the 166-bed hospital this month but also ordered the company to resume admitting elective patients.
But some say that what is happening in Marina del Rey is a reflection of the pressures from consumers and regulators that are building against big hospital chains. As Tenet, HCA Inc., Sutter Health and others have bought more struggling hospitals in recent years, they have amassed market power and raised their rates.
Most likely, the Santa Barbara-based company still will be able to shut down the hospital fairly soon. - - - Besides hefty legal fees and expenses to restaff the hospital, the damage to Tenet's public image and its relations with the state attorney general's office probably will make future acquisitions tougher.

"It's going to get a lot more scrutiny than it would otherwise because I don't trust them to keep their promise," said Atty. Gen. Bill Lockyer, referring to Tenet's negotiations to buy the Kenneth Norris Jr. Cancer Hospital in Los Angeles.

- - its missteps - - have made it more vulnerable to critics of the company's strategy of buying distressed hospitals and sometimes disposing of them.
But in the late 1990s, the federal government reduced Medicare reimbursements and the sisters had little clout to negotiate better payments from powerful managed-care companies.
(the Sisters were desperate to find a buyer).
The company also already owned two larger hospitals not far away- - - - The Freeman hospitals meant more control of the market in the Los Angeles International Airport area and the ability to shift patients and resources within its network.

- - - Atty. Gen. Lockyer, - - approved the transaction with certain conditions. Tenet agreed to maintain charitable work and to keep Daniel Freeman Memorial open for at least five years.

Though it made no such commitment regarding Marina, the company pledged to develop a "comprehensive planning process" and consult with the hospital's governing board and community leaders and get input from the public before deciding to close Marina, according to Tenet's purchase agreement.
By mid-June, Tenet had closed Marina's rehabilitation ward and put the hospital buildings and land up for sale. Its broker began marketing the property as an excellent investment or development opportunity.

Critics complained that Tenet did not want a competitor to buy it. The company denies that.
Julie Inouye, a singer and actress whose husband gave up his Beverly Hills practice years ago to work as an ER physician at Marina, was so upset by Tenet's actions that she launched a community revolt. She elicited the help of neighborhood associations, the medical staff at Marina and groups such as Consumers Union, the Community Health Councils and the Service Employees International Union. The coalition set up a Web site, lobbied politicians and collected petitions from residents, who came out of the woodwork by the hundreds.
"Tenet may not make enough money on it to justify their rate of growth," said Bhatia, who has been at the Marina hospital for 20 years. "They may not become filthy rich, but I doubt they will lose money."
Closures Put Big Hospital Chains Under Microscope Health: An uproar in Marina del Rey reflects growing government and consumer pressure. LA Times August 22 2002
Tenet Healthcare Corp. finally has its chance to shut down 153-bed Daniel Freeman Marina Hospital, Marina del Rey, Calif., - - - - - it has reached an agreement to settle a lawsuit filed by California Attorney General Bill Lockyer in August 2002.
Tenet said it has agreed to donate $400,000 to the California Community Foundation, which will make grants to charities providing healthcare services in the hospital's service area. Tenet also said it will pay the state of California $100,000 to offset its costs in bringing and settling the lawsuit.
Closing Calif. hospital will cost Tenet $500,000 Modern Healthcare April 1, 2003

In a separate announcement, Tenet said it won't close 153-bed Daniel Freeman Marina Hospital, Marina del Rey, Calif., because community support for keeping the hospital open is so strong. Tenet's Barbakow to resign as chair in board revamp Modern Healthcare April 8, 2003

A year after Tenet promised to keep the Daniel Freeman hospital at Marina del Rey open it became one of the many hospitals to be sold in order to remain viable after Tenet's major 2002 scandal. Julie Inouye and her group had raised the money to buy their hospital.

Tenet announced that a group of hospitals including the Daniel Freeman were to be sold to a newly formed group, Centinela Freeman HealthSystem. This was run by two of Tenet's existing hospital managers and there was a suspicion that Tenet had given the hospitals away. All of these hospitals were under investigation for involvement in Tenet's practices.

Inouye's group claimed that Tenet had shut them out of the sale and that they had not been allowed to bid for the hospital.

One on the block is Daniel Freeman Marina Hospital in Marina del Rey. A local investment group, which includes some doctors, is trying to line up financing and hopes to meet Tenet's qualifications to bid on the 166-bed facility. The group would operate it as a nonprofit.

 Julie Inouye, who led the community revolt two years ago that prevented Santa Barbara-based Tenet from closing the hospital's doors, is director of the group, called Community Action for Healthcare Reform and Education.

It fears that if Daniel Freeman Marina is sold to a for-profit company, the hospital, which sits on valuable real estate, may once again be in jeopardy.
Doctors' Hospital Bids Raise Ethical Worries : As physicians seek to buy Tenet holdings, critics wonder whether profit would come before patients. LA Times April 5, 2004

The company (Tenet) announced late Tuesday that Centinela Freeman HealthSystem, which includes a pair of Tenet hospital CEOs, has won the bid for three west Los Angeles hospitals. However, the company failed to disclose terms of the deal -- suggesting to some that it may have turned the hospitals over for free.
A local community group, which sought the Marina hospital for itself, suspects that Centinela Freeman HealthSystem secured the Los Angeles facilities for nothing as well. The group, known as We CAHRE (which stands for Community Action for Healthcare Reform and Education), claims it was stonewalled in its own efforts to negotiate for the very Marina hospital that it saved two years ago when Tenet tried to shut it down.

Instead, We CAHRE says, Tenet favored a group of insiders from the beginning. Centinela Freeman HealthSystem is being chaired by a longtime Centinela board member, Michael Finnegan, - - - - .. The group has named Centinela CEO Michael Rembis as the chief of all three hospitals. And it will retain Daniel Freeman CEO Harris Koenig as its senior vice president.
Specifically, they worry the new owners will try to sell Marina to developers who are interested in the valuable real estate on which the hospital sits.
Certainly, they understand that all three hospitals are under investigation by the government. The probes, seeking evidence of illegal physician kickbacks, began last year when both administrators were at the helm of the facilities.
Meanwhile, other members of Centinela Freeman HealthSystem are possible targets of the government as well. - - - - Apex Cardiology Consultants -- a high-profile practice at Centinela -- has fielded a subpoena and appears to be the focus of an investigation by federal prosecutors.
Tenet Transfer Extends L.A. Saga Los Angeles Times (Melissa Davis) September 2, 2004

Los Angeles, California

Tenet had been managing the University of Southern California (USC) Norris cancer hospital for 5 years. As I recall this was another of the teaching hospitals alliances with Tenet, which I tried to influence by supplying information. Tenet agreed to buy the hospital in 2002. Once again there was a concerted effort by groups in the community to prevent this. The attorney general eventually approved the sale but imposed stringent conditions.

Coalition for Quality Health Care, a coalition of nurses, cancer survivors and community health advocates, today called upon California Attorney General Bill Lockyer to stop the sale of USC/Norris Hospital to Tenet Healthcare Corporation (THC). - - - - - Carolyn Tapp, Executive Director of the Women of Color Breast Cancer Survivor Support Project (said) "Selling to Tenet, a corporation with a record of questionable patient care practices and unethical over-charging, is a risky scheme."
Norris is one of only 41 National Cancer Institute designated cancer centers in the United States. If sold to Tenet, it will become the only center to be operated for a profit. "
"How can a corporation with a track record like Tenet's be trusted to act responsibly when owning a hospital with such an expensive and necessary specialty?" said Lourdes Rivera, an attorney at the National Health Law Program. "There are too many opportunities to exploit patients who desperately depend on care that is already costly."
"Patients at a major cancer research hospital should not be subjected to the kind of staffing practices Tenet has put in place at its other Los Angeles hospitals.
Coalition for Quality Health Care Calls on California Attorney General to Stop Sale of Norris Hospital to Tenet Healthcare Corporation -- Coalition Says Sale is "Risky Scheme" and a "Sweetheart Deal" That Could Threaten Future Cancer Research and Endanger Patients BUSINESS WIRE November 25, 2002

Despite the retrenchment announced Tuesday, Tenet still is moving forward with a $35-million acquisition of the USC/Norris Comprehensive Cancer Center and Hospital in Los Angeles, a 60-bed facility with a national reputation for being on the cutting edge of cancer research. Tenet has managed that facility for five years.Tenet to Close or Sell 14 Hospitals in an Overhaul :: For-profit chain says it will lay off some employees as it cuts costs and boosts efficiency. LA Times March 19, 2003

California Atty. Gen. Bill Lockyer has approved Tenet Healthcare Corp.'s proposed $35-million purchase of nonprofit USC/Norris Cancer Hospital in Los Angeles; but he imposed strict conditions to preserve cancer-care and charity programs already in place.
State OKs Tenet's Offer for USC Cancer Center :: The hospital operator is reviewing conditions imposed on the deal to determine whether it will proceed. LA Times June 4 2003

San Pablo, California

Not for profit hospitals are generally in poorer areas but Tenet had been profitable. It is likely that when Tenet was forced to abandon their outlier strategy and stop gouging the uninsured these hospitals were no longer profitable. Tenet, which had been a white knight in saving struggling not for profits, started selling or closing them. In San Pablo Tenet leased the hospital from the community. When Tenet decided not to renew its lease locals found themselves scrambling to find someone to keep their community hospitals open.

Directors of Doctors Medical Center in San Pablo, facing the prospect of closing a hospital that serves some of the East Bay's poorest residents, are scrambling to find someone to take over for Tenet Healthcare, which is bailing out.

The West Contra Costa Health Care District, which owns Doctors, is in preliminary discussions with about a dozen companies interested in running the hospital, but no offers have been made. If the district can't find a new operator before Tenet leaves on July 31, it plans to run Doctors itself. But without a substantial increase in funding, the hospital -- which has 200 beds and 900 employees -- could be forced to close.
For many, the situation has a feeling of deja vu. The San Pablo hospital was struggling financially when Tenet took over seven years ago and merged it with the Pinole facility.
If the district is forced to operate the hospital on its own, Gioia said, it would need about $10 million a month to meet operating costs. It's not clear where the money would come from, officials said.

Tenet to opt out of lease to run Doctors San Francisco Chronicle March 9, 2004

Orange County California -- Integrated Healthcare Holdings

Integrated Healthcare Holdings was formed in 2004 with the specific intention of benefiting from Tenet's sell off. It arranged to buy 4 hospitals in Orange County.

Things took a turn when it was revealed that a Dr Kali Chaudhuri was a major investor and a moving force behind the company. He was in a position to take control. He had previously had dealings with Tenet.

Chaudhuri had founded a general practice company, which operated in California. It was widely accepted that it was his ineptitude that resulted in many thousands of Californian patients being precipitously dumped without medical care and without medical records when it went bankrupt in 2000.

I have not addressed the Chaudhuri debacle on this web site but Barlett and Steele describe what happened and the serious consequences for Californians. He used it to illustrate the operation of market forces. Their book about market medicine is titled "Critical Condition: How Health Care in America Became Big Business & Bad Medicine".

A series of public meetings and official investigations followed the disclosure of Chaudhuri's involvement. After the company was restructured to minimise Chaudhuri's influence the sale went through. Although Chaudhuri remained a major investor he was prevented from gaining control.

Not long afterwards a group of Integrated Healthcare Holdings shareholders commenced a class action seeking compensation for being induced to buy stocks under false pretences. Welcome to the modern world of health care entrepreneurs.

The new company, Integrated Healthcare Holdings, said it is pursuing financially distressed and underperforming hospitals and is specifically exploring the hospitals that Tenet Healthcare Corp. has for sale
New company eyes buying Tenet facilities Modern Healthcare June 4, 2004

Integrated Healthcare Holdings Inc. announced Thursday that it has agreed to buy four hospitals from Tenet Healthcare Corp. for about $70 million. The four Orange County hospitals include the 280-bed Western Medical Center in Santa Ana, the 188-bed Western Medical Center in Anaheim, the 114-bed Chapman Medical Center in Orange and the 178-bed Coastal Communities Hospital in Santa Ana.
Tenet agrees to sell four Orange County hospitals San Francisco Gazette September 30, 2004

Two physicians are asking Orange County, Calif., officials to look into the pending sale of four Tenet Healthcare Corp. hospitals to Integrated Healthcare Holdings, Costa Mesa, Calif., because of their concerns about a physician investor in Integrated, the Los Angeles Times reported.
- - - - - criticized Integrated for working with Kali Chaudhuri, an orthopedic surgeon and founder of KPC Medical Management, a clinic operator that went bankrupt in 2000.
Docs seek county review of Calif. hospital sale Modern Healthcare November 24, 2004

State regulators, legislators and Orange County supervisors have all raised questions in recent weeks about the history of Kali P. Chaudhuri, a Hemet surgeon who is the lead investor in Integrated Healthcare Holdings Inc., which has agreed to pay Tenet $70 million for the four hospitals.
"The department has some concerns about whether the clinics operated by this doctor have been operated in compliance with licensing law, and more generally about the applicant's reputable and responsible character," said DHS spokeswoman Lea Brooks.
Chaudhuri is widely known, and often resented, for the failure of his KPC Medical Management, a chain of doctors' clinics that collapsed in November 2000. The collapse disrupted the care of 250,000 KPC patients and left debts of $450 million owed to 3,000 creditors, including many local doctors. As Chaudhuri himself has acknowledged, questions were raised at the time -and still linger -about whether he misused money that should have been spent on medical care and to pay his creditors.
The department also expressed concern about whether Chaudhuri's medical clinics were in compliance with state licensing codes.
Hospital buyer faces inquiry The Orange County Register January 7, 2005

Integrated Healthcare Holdings Inc. announced today that it has restructured its agreements and financing arrangements - - - .
- - - the primary equity financing will be provided by Orange County Physicians Investment Network LLC (OC-PIN), a company founded by Dr. Anil V. Shah and owned by a number of physicians practicing at the hospitals. OC-PIN will provide most of the financing that was originally agreed to be provided by Dr. Kali Chaudhuri.
IHHI Restructures Agreements to Acquire Four Tenet Hospitals in Orange County Los Angeles Los Angeles Business News January 31, 2005

Tenet Healthcare Corp. has completed the $70 million sale of four hospitals to a Southern California investment group.
Tenet Healthcare completes sale of four Orange County hospitals Associated Press March 9, 2005

As with similar securities fraud cases, investors hope to receive compensation for being induced to buy stocks until false pretenses.
California investors file complaints against Integrated Healthcare Holdings, Inc. and hope to build a class action lawsuit Press Release November 10, 2005

Slidell, Louisiana

In Slidell Tenet's planned purchase of a not for profit hospital created a public outcry. The hospital was in financial trouble because an HMO with which it was closely associated became bankrupt.

The objections grew in volume as Tenet's disturbing conduct was exposed. The FTC objected to the sale as anti-competitive and it was eventually taken to a referendum. The public overwhelmingly rejected Tenet.

Al Hamauei, chairman of Slidell Memorial's board, said his hospital would consider Tenet's bid, along with those from HCA and others. But he expressed concern that a purchase by Tenet would give the company a monopoly in the area. "I am not going to do anything that will cause health-care problems for the community, whether it is increased cost or less service," he said. Closures Put Big Hospital Chains Under Microscope Health: An uproar in Marina del Rey reflects growing government and consumer pressure. LA Times August 22 2002

The current Slidell Memorial board would lose control of the hospital but would administer public health and welfare programs in the 6th, 7th, 8th and 9th wards covered by the district.
Tenet likely to take over Slidell hospital ; $130 million bid seems to be the best deal to commissioners The Times-Picayune October 11, 2002

Wednesday night was damage control time for hospital chain Tenet Healthcare Corp. in the southern Louisiana bedroom community of Slidell.

A team of Tenet executives came there to try to salvage its $130-million deal to buy Slidell Memorial Hospital. A packed room full of hospital board members and citizens quizzed Tenet officials about a federal investigation of the company's Medicare billing, an FBI raid at a Tenet facility and the company's plummeting stock price.

By night's end, Slidell's hospital board voted 8 to 1 to keep the deal alive. But because of the hospital's complex ownership, the board also agreed with a suggestion by Louisiana's attorney general to put the sale before voters in a referendum next year.
Tenet's Woes Making Deals a Harder Sell :: The firm's acquisition strategy, including a Louisiana hospital deal, faces new challenges. LA Times November 22, 2002

In an ominous sign for Tenet Healthcare Corp.'s proposed $170 million acquisition of Slidell Memorial Hospital in Louisiana, the Federal Trade Commission said Tuesday, April 1, that the deal raises "serious competitive concerns" and may harm consumers.
FTC questions Tenet's Louisiana purchase The Daily Deal April 2, 2003

Voters rejected by a 3-to-1 margin Tenet Healthcare Corp.'s $130 million bid to purchase 182-bed Slidell (La.) Memorial Hospital, according to the Louisiana secretary of state's office.
Tenet's bid for La. hospital nixed by voters Modern Healthcare April 7, 2003
Caruso said the Oath's meteoric crash was "a major contributor" to Slidell Memorial's financial slump in 2002, which forced it to seek a sale to Tenet Healthcare Corp. Local voters rejected the deal in April 2003 amid antitrust concerns, but later approved a 20-year property tax to save the capital-starved hospital
HMO dreams end in court: Barry Scheur began the Oath of Louisiana with big plans; now he stands accused of fraud after the HMO?s collapse. Modern Healthcare December 5, 2005

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Buying again in 2007

Tenet has never stopped talking about growth even as it has sold half of its hospitals. No sooner had it settled all of its lawsuits than it started strategic purchases to increase its leverage. This is a company that has just lost over US $5 billion of shareholders money yet its bankers and creditors must have welcomed it back into business as usual and approved this. The community were divided about this but they had little input as Tenet was simply buying from another for profit company,Lifepoint. It is fascinating that so many locally support the sale because this company that has just lost so much money is seen to have deep pockets. A 41 bed acute care hospital is simply not viable. Tenet has eliminated competition. How soon before it closes the hospital.

As more details emerge about Tenet Healthcare Corp.'s plan to purchase Coastal Carolina Medical Center in Hardeeville, questions have arisen about what the move could mean to local health care.

Of the 11 local physicians interviewed over the last several weeks, more than half said they are nervous about what a deal might do to their private practices.
If Tenet succeeds, those doctors say it could bring more services and equipment because the company has deeper pockets.
White thinks Tenet's pursuit of the Hardeeville hospital is part of a short-term effort to "recapture the market share they're losing" to hospitals in Savannah and Beaufort.
Acquiring another hospital in South Carolina could enhance Tenet's bargaining power with insurers, which could help lower some costs to consumers, said Alwyn Cassil, director of public affairs for the Center for Studying Health System Change, a Washington-based, nonpartisan policy research organization.
Who really benefits if Tenet buys Coastal Carolina Medical Center? June 22, 2007

Tenet Healthcare Corp. closed the deal to purchase Coastal Carolina Medical Center early Sunday morning in a $35 million transaction that places all major health care facilities in southern Beaufort and Jasper counties under the same ownership.

The 41-bed Hardeeville hospital joins the 93-bed Hilton Head Regional Medical Center and the Bluffton-Okatie Outpatient Center under Tenet ownership. Tenet is acquiring the hospital from LifePoint Hospitals Inc.
The deal closed Sunday at 12:01 a.m., just more than a week after filing for a certification exemption with the state. State approval came late Thursday, allowing the transaction to be completed over the weekend.

Typically, Tenet would have announced the agreement before seeking a state license, Tenet spokesman Steven Campanini said.

"It was a bit different this time because of a request by LifePoint" to not make an announcement until a final agreement was reached, he said. "We wanted to complete this transaction, so we agreed to it."
Coastal Carolina is the first hospital acquisition by Tenet in nearly five years.
Hardeeville hospital has new owner The Island Packet Online July 2, 2007

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Web Page History
This page created July 2003 by
Michael Wynne
Revised and partly rewritten Feb 2007
Further additions July 2007