As demand for certain medical services sharply dropped or shifted in the midst of the COVID-19 pandemic, Tenet Healthcare have been working to position itself to take advantage of those changes, officials told analysts on Wednesday.
The Dallas-based hospital giant has been among health systems across the country hit hard financially by the pandemic, reporting drops in revenue in July and August as many of its markets experienced surges in cases. COVID-19 positive inpatient census surging by approximately 64% in its markets in late July and August.
In a statement when the company released its third-quarter earnings, CEO Ron Rittenmeyer said the quarter shaped up to be "in many ways more challenging than the second."
Tenet reported operating revenues were $3.8 billion in the third quarter ended Sept. 30, down 1.2% from the same quarter in 2019. The drop was attributed to lower patient volumes as a result of COVID-19, which were substantially offset by higher patient acuity and negotiated rate increases.
“We realize and operate every day with the assumption that COVID spikes will be part of what we face until a vaccine becomes widely deployed,” said Rittenmeyer during the company's third-quarter earnings call. “We learned how to deal with these spikes and have done so effectively.”
Tenet reported it narrowed its net loss from continuing operations attributable to common shareholders to $197 million from losses of $227 million in the same quarter of 2019.
That has included a robotics program in El Paso, expanded rehabilitation facilities in South Carolina and a CT surgery expansion in parts of Texas, he said.
"Our point has been continuing to advance this strategy of expanding surgical service lines for the community as a way to drive and be prepared to manage their recovery over time recognizing some of the lower acuity business that was in hospitals, we’ll say low acuity ER visits, might take a long time to come back," Cancelmi said. "We’re not trying to create a replica of what 2019 looked like from a [case] mix. We’re looking at where the market is headed and trying to address that make as part of our recovery. “
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Officials credited federal grants and accelerated payments with helping to stabilize operation. The company has received about $1.5 billion in Medicare advance payments from the Centers for Medicare & Medicaid Services so far. Tenet also received about $890 million of grant aid from federal stimulus relief funds and recognized approximately $453 million of grant aid as income year to date, with grants received being evaluated based on recently updated guidance from the Department of Health and Human Services.
"With the issuance of revised guidance on grant income from HHS late in the quarter, we, along with other providers, are facing new challenges in terms of federal support," Rittenmeyer said. "We believe our hospitals’ focus on additions of strategic service lines, coupled with continued positive growth and efficiency at USPI and Conifer, has positioned us well this quarter and provides the basis for continued solid performance going forward.”
Conifer spinout
Tenet has not yet secured a new CEO to lead its revenue cycle management business Conifer after the abrupt departure of its previous CEO.
Joseph Eazor, who was named CEO in January and was expected to lead Conifer through the planned spinoff and post-completion, stepped down in August. Tenet has said it still expects to spinout Conifer by June 2021. “We have filed the appropriate paperwork on schedule with the IRS,” Rittenmeyer said.
He said the company has had several meetings with viable candidates in the process of finding a new leader.
“The team is performing very well and we are pleased with the overall performance of the business," he said.