Tenet reorganization to include regional management cuts
- Tenet will cut its regional management layer as part of a restructuring effort, Modern Healthcare reported.
- The move is expected to be completed by the end of October and more details will be given during the hospital operator's earnings call, scheduled for Nov. 6.
- Sheryl Skolnick, an analyst from Mizuho Securities, told Modern Healthcare investors have questioned why the company's operating margins were not similar to its peers.
Tenet is making efforts to improve its finances in the face of declining admissions.
Many for-profit hospital operators have the same struggle. Tenet, which runs 77 hospitals, disclosed a 4.5% decline in total patient admissions in the first six months of 2017 and a net loss of $56 million in Q2.
Since the disclosure, CEO Trevor Fetter resigned (he'll stay in the position until March 2018) while the company has experienced a board shakeup. Tenet plans to sell eight U.S. hospitals and all nine U.K. facilities, and reports have hinted at a possible sale of the company.
The restructuring effort seems in line with other recent initiatives responding to the pressure of investor activity. As many companies in the healthcare space have seen this year, investors are increasingly interested in entering board rooms if they believe a company isn't performing up to scale with its competitors.
In addition, trimming regional management layers could help make for a lean, agile organization that could be more attractive to a potential buyer.
- Modern Healthcare Tenet to cut regional management layer in reorganization
- Healthcare Dive As health systems' stocks trend downward, investor pressure rises
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