- Texas-based Tenet Healthcare reported a quarterly revenue loss of 3.3% and its net operating revenue dropped to $4.86 billion last year from $5.05 billion in 2015.
- Tenet, one of the nation's largest for-profit hospital operators, attributed its losses to a lack of demand.
- Yet the operator says it is prepared to weather any policy changes as the President Donald Trump administration continues to plan on repealing and replacing the ACA, but believes that it will be a while before the healthcare industry can "see any sort of radical changes."
Tenet is not the only for-profit hospital system in the country that has been facing financial struggles and bad debt. Chief Financial Officer Daniel J. Cancelmi said during the earnings call on Tuesday, "as we think about our goal of reducing our debt-to-EBITDA ratio to five times or less, we now expect to achieve this in 2019, or possibly sooner depending on the level of asset sales and how we decide to redeploy the capital that is raised." CHS, the largest for-profit hospital operator in the U.S., has also been attempting to address its massive debt with divestitures for months. CHS and Tenet both plan to divest more assets this year.
"We will update our outlook for divestitures once we have more visibility into the timing of the transactions," Cancelmi said.
Meanwhile, some for- and nonprofit U.S. hospital systems that have been offering their own health insurance plans grew their operating revenues in 2016. Operating revenues at the University of Pittsburgh Medical Center (UPMC), for example, increased to $6.8 billion last year. If more insurers leave the ACA marketplace than the numerous ones that have already done so, not only will competition in the insurance market continue to decrease, but the number of uninsured Americans may also increase. This may lead to a more pronounced trend in hospitals launching their own health plans, which ensure revenue from a certain patient population, to avoid relying on the federal government.
"We've also significantly increased the proportion of our earnings that come from businesses that are far less reliant on government programs than the core hospital business," Tenet CEO Trevor Fetter said. Tenet says the Trump administration has been changing its rhetoric around healthcare reform a lot but it is prepared for any changes to insurance policy that may come. "If we look back to November-December, it was all about we're going to repeal the ACA day one, then that morphed into repeal and replace," Fetter said. "That has morphed into repair, and I think that's all positive for us."