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December 2, 2013

Tenet tries to remake image

During the early and mid-2000's Tenet Healthcare Corp. faced a series of legal problems at several of its hospitals that led to investigations of fraud, Medicare overbilling, and anti-kickback violations.

Tenet was investigated for several different matters by the U.S. Justice Department, U.S. Department of Health and Human Services, and U.S. Securities and Exchange Commission. Doctors at one of Tenet's California hospitals, for example, were accused of performing unnecessary heart surgeries.

In 2006, Tenet agreed to pay the Justice Department $725 million to settle a host of investigations, including allegations that it overbilled Medicare.

Tenet paid several other fines over the past decade as well, causing its reputation to take a hit. Tenet didn't admit legal wrongdoing, but the company's executives did say it had a flawed corporate culture that led to aggressive pricing, among other issues.

Trip Pilgrim, Tenet's senior vice president and chief development officer, said the health care company is a much different organization today and that most of its legal issues arose before the current management team took over.

Tenet's CEO Trevor Fetter was named to his current position in 2003.

“We are a different company than 10 to 15 years ago,” Pilgrim said.

Sheryl Skolnick, a healthcare analyst with CRT Capital Markets in Stamford, said Tenet experienced about a “99 percent” turnover in hospital and senior level management following its legal woes last decade, which helped reposition the company. She said Tenet refocused its efforts on care quality and strong physician relationships.

“It really completely changed the focus of the company,” Skolnick said.

The biggest challenge Tenet faces today is weak hospital volume, especially for inpatient services, Skolnick said. Many people are still putting off elective surgeries or choosing lower cost outpatient centers to get procedures done.

“Demand for inpatient services is lagging,” Skolnick said.

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