Tenet to Move Its Headquarters to Dallas
Bowing to shareholder pressure, Tenet Healthcare Corp. is expected to announce today that it is moving its headquarters to Dallas from Santa Barbara in the next year.
California’s largest hospital chain, Tenet has faced a series of scandals including several federal fraud investigations in the last 18 months as its stock declined more than 70%.
Trevor Fetter, who became the company’s chief executive in September, had told Tenet’s 115 Santa Barbara employees in March that a move to Dallas may help Tenet distance itself from a “tradition of self-indulgence” that marked the reign of former CEO Jeffrey Barbakow, who resigned in May of last year. In 1996, Barbakow moved Tenet’s headquarters from Santa Monica to Santa Barbara because that was where he lived.
“Over the past 18 months, we have taken dramatic action to address every issue facing this company,” Fetter said. “The consolidation of our corporate offices is part of our overall effort to make Tenet a more effective and efficient company.”
He said that not all employees would be offered positions in Dallas. Fetter plans to move later this year.
Shareholders have complained about the cost of running Tenet’s corporate headquarters. Among other things, the company needed to own several jets to transport executives to meetings in Dallas, where Tenet houses its 750-employee business operations unit.
On Tuesday, Tenet reported its fifth consecutive quarterly loss. The company is in the midst of a turnaround and plans to shed a third of its 95 hospitals.
Moving its headquarters “makes a lot of sense from an informational flow purpose,” as top financial executives will be better able to communicate with operational executives, said Sheryl R. Skolnick, analyst with Fulcrum Global Partners in New York. “I don’t know that it means a new start for them. But it shows that Fetter and his team are capable of big changes.”
Tenet will close its office on State Street, a main Santa Barbara thoroughfare, within a year and then sell the 35,000-square-foot building.
Santa Barbara Mayor Marty Blum said city officials had met with Tenet last year to try to persuade the company to stay. The city was able to work out a deal with the local airport to provide nonstop flights from Santa Barbara to Dallas, which began in February.
“I don’t know what else we could have done,” she said. “We’re real sorry to see them go.”
Tenet has a total of 11,000 employees in Texas.
“I am excited to welcome Tenet to Texas,” said Texas Gov. Rick Perry in a statement.
Still, California will remain Tenet’s largest market, with 17 hospitals and 19,500 employees.
