- Tenet Healthcare announced Tuesday it is exploring the sale of its revenue cycle management arm, Conifer, as it expands a targeted cost-reduction program.
- The Dallas-based hospital system said its 2018 outlook is net operating revenues of $17.8 billion to $18.2 billion, based on organic revenue growth, a pipeline of acquisitions across ambulatory offerings and the completion of a variety of divestitures.
- The company said it is also continuing a shakeup of its board of directors, and has appointed three independent directors since the end of August.
Tenet had a rough 2017, and briefly considered selling itself a few months ago. That was after a Q3 net loss of $366 million that prompted a cut of 1,300 jobs. The health system attributed some of its financial woes to Hurricanes Harvey and Irma. In October, CEO Trevor Fetter stepped down several months ahead of schedule.
The hospital chain has been under investor pressure this year as it looks to reduce its $15 billion debt load. The hospital operator announced earlier this year the sale of eight U.S. hospitals in four markets and all nine of its U.K. facilities to chip off $900 million to $1 billion of debt.
Tenet is looking to shed weaker assets to help improve in markets and products that can help the company thrive and grow. In particular, the sale of MacNeal Hospital in the Chicago area signaled an exit in a competitive market in which the operator had little market share. Tenet has also sold three Houston assets to HCA and will exit the Philadelphia region with the sale of two hospitals to Paladin Healthcare.
On Monday, the company closed the 232-bed Abrazo Maryvale Campus in Phoenix.
Tenet isn't alone facing tough conversations in board rooms. Activist campaigns against large U.S. companies have increased since 2010, according to a McKinsey & Company analysis.
The potential sale of Conifer would be another way to bring down debt and find a more stable financial footing that pleases investors. Tenet emphasized, however, that it is only exploring the sale of Conifer and might decide not to go forward with a deal. A decision is expected in the first half of next year.
“We remain open to all options that can enhance shareholder value, and given that we have adequate liquidity to operate our business and no near-term debt obligations, we have the flexibility we need to achieve the best alternative for shareholders," Tenet CEO Ronald Rittenmeyer said in a press release. "Conifer has great business lines with strong growth potential and robust free cash flow."
In the same announcement, Tenet stated it is adding a "Quality and Patient Experience Gatekeeper" to its annual incentive plan next year. The gatekeeper will require certain levels of improvement and performance across quality and patient experience measures in order for participants to be eligible to participate.
With this program, Tenet is using the carrot and stick routine for participants to have "more skin in the game" and hope to align incentives to perform care more efficiently.