Tenet to Eliminate Jobs, Close 14 Offices in State

Tenet Healthcare Corp. said Friday that it would eliminate 300 jobs as it closes dozens of business facilities and hospital administrative offices, including 14 in California, to consolidate billing operations.

A Tenet spokesman said the company had not identified which jobs would be cut.

Tenet will spend $275 million over the next three years to streamline billing operations. The company said it expected to save $75 million annually as a result of the streamlining.

The Santa Barbara-based company was looking to cut costs as Medicare payments shrivel. Last month, Tenet suffered its first quarterly loss in nearly four years after the company changed the way it billed Medicare.

Tenet is the target of a federal investigation into how it handled Medicare payments for the sickest patients. Doctors at its hospital in Redding are being investigated amid allegations they performed unnecessary heart surgeries, and the chief executive of a San Diego Tenet hospital has been indicted by a federal grand jury for allegedly violating anti-kickback laws by authorizing illegal payments to doctors to win more referrals of Medicare patients.

As part of the restructuring, Tenet said it would reduce 56 central business offices and hospital billing offices to eight regional offices. Two will be in California -- in Modesto and Alhambra -- and the others in South Florida, Philadelphia, Dallas, New Orleans, Atlanta and St. Louis. In addition, Tenet said it would have one office to handle Medicare transactions.

Analysts said the move was expected, but some expressed surprise at the large number of offices involved in Tenet’s aggressive bill-collecting strategy.

“We all knew that [Tenet] had been absolutely great at collecting what they were owed, but not the magnitude of it,” said Sheryl Skolnick, an analyst at Fulcrum Global Partners.

The reductions and their costs will have a negative effect on earnings into 2004, Skolnick said, as the company is forced to trim fat that had been added during the years when Medicare payments were higher.

Shares of Tenet fell 53 cents to $15.36 on the New York Stock Exchange. The stock has lost more than two-thirds of its value since last year.