Although Tenet Healthcare navigated rocky financial terrain from the COVID-19 pandemic, the Dallas-based health system giant began to steady itself at the end of the second quarter, officials said on Tuesday.
In particular, Tenet Executive Chairman and CEO Ronald Rittenmeyer said the organization saw a turnaround happen in June.
"Our results in the quarter, particularly in June, underscore the ability of the business to adapt, flex and perform and provide clarity that we would deliver at or above expectations, even in times of a crisis," Rittenmeyer said.
In June, the health system reported during a second quarter call with analysts that its patient volumes, cost management and earnings improved in June as it began to ramp back up facilities as various states began to ease shelter-in-place restrictions. Among moves made by the health system increased its credit line in April and placed two secure note offerings during the quarter to improve liquidity. The health system aso "flexed down" certain operating expenses including salaries, wages and benefits and supplies.
Not counting government stimulus funds provided to the health system via the CARES Act, the health system reported earnings before interest, depreciation, taxes and appreciation of $218 million in June, Rittenmyer said, only 'slightly lower' than its performance in the same month a year earlier. (He declined to break out June 2019's specific performance.)
"While we believe given the current COVID surges, which we are managing well in several markets ... we do strongly believe that June is representative of how we will recover," he said. "The changes we've made during the quarter are permanent, they are sustainable and they will continue going forward. As I said, June was the turning point for us."
The healthcare giant posted $88 million in profits for the second quarter as federal COVID-19 relief funding helped offset patient volume declines over the past few months. The earnings released late Monday by the hospital chain is the latest to show how $175 billion in federal relief are helping hospital chains stay afloat.
Tenet reported net income from continuing operations of $88 million, compared with $24 million in profit in the same period from 2019.
“Without a doubt, the financial support of the CARES Act provided an important bridge to minimize the financial crisis the pandemic created, allowing uninterrupted care for our patients and communities,” said Rittenmeyer said in a statement.
Net operating revenues for hospitals was $6.9 billion in the second quarter, a decline of 10% from $3.8 billion in the second quarter of 2019.
For Tenet’s ambulatory segment, net revenues were $368 million, nearly 30% below the level earned in the second quarter of 2019. Net patient service revenues were $6.3 billion in the second quarter compared with $7.1 billion in 2019.
Tenet said that it received $1.5 billion from Medicare advance payments, which it must pay back by April 2021. It also got more than $850 million in aid from the $175 billion provider relief fund passed by Congress a few months ago.
Tenet said the funding was pivotal as patient volumes have been on a roller coaster since the onset of the pandemic in March.
Hospital admissions were down 33% in April compared with the same month in 2019. But volumes rebounded slightly in May, which were down 20% compared with May 2019 and down 10% in June compared with the same month in 2019.
Outpatient visits, however, were down more than 60% in April compared to the same period in 2019. Outpatient visits did climb in June, as they were only down 10% compared to the same month last year, Tenet’s earnings release said.