tenet healthcare says it will review its prices in the wake of a federal probe into whether the company broke laws concerning medicare reimbursements. two senior executives, including the hospital company's cfo, have resigned.
ap/new york times, nov. 8, 2002
by reed abelson
in reaction to regulatory inquiries and rising anxiety among investors, tenet healthcare, one of the nation's largest commercial hospital chains, said yesterday that it had overhauled its management team and would review its aggressive pricing strategy.
tenet's policy of significantly increasing its hospital prices, which helped create much of its robust profits in recent years, has become the center of controversy. the recent spike in hospital costs has become a source of concern nationwide, and tenet said yesterday that aggressive pricing, particularly in california, had resulted in an unusual amount of special payments from medicare. those payments have already attracted the attention of federal regulators, who said earlier this week that they planned to conduct an audit to make sure the payments were proper.
tenet's pricing strategy "is inconsistent with the position and posture that i want tenet to have in the industry," jeffrey c. barbakow, tenet's chairman and chief executive, said in a conference call late yesterday afternoon with analysts and investors. the call lasted for more than three hours.
mr. barbakow said that the practice did not violate any medicare rules, but he described the company as conducting an "intensive review of our overall strategy, particularly pricing."
tenet's change in stance appears to reflect its concerns that a policy of sharply raising prices has become a lightning rod for regulators and other critics, said sheryl skolnick, an analyst with fulcrum global partners, who has a neutral rating on the shares. but analysts raised concerns that the company's less aggressive posture could hamper its negotiations with insurance plans. tenet's operating strategy is "significantly damaged," ms. skolnick said.
tenet also announced the departure of two senior executives, including its chief financial officer, and the creation of a new executive management team that will report directly to mr. barbakow. the company also named a former executive, trevor fetter, as its president....
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