Even as Tenet Healthcare officials indicated Tuesday that the plan to divest from revenue cycle management subsidiary Conifer Health Solutions is close to complete, they also assured analysts they are still planning on a long-term relationship with the company.
"We’re married to them. We’re going to get a divorce, but we’ve still got to live with them. They are a major part of our life going forward," said Tenet's CEO Ronald Rittenmeyer referring to Tenet's commercial agreements with its business services group. "It’s not optional at this stage. So part of a sale anticipates that a long-term contract would go with it. That's the value in the deal."
Suitors for the business services group have included health giants like UnitedHealth Group and is expected to fetch up to $2 billion as part of Tenet's divestiture strategy. Rittenmeyer reiterated during a third-quarter earnings call on Tuesday that officials are down to "a very few viable participants" and in the "late stages" of closing the process.
"I realize many believe we should have accomplished this faster, our commitment to the shareholders is to do it right," Rittenmeyer said. "This process has been very deliberate and has raised other opportunities that we are now actively evaluating for Conifer that could deliver more value to our shareholders than an outright sale." Those alternatives include a merger, a tax-efficient spin-off, or even a combination of alternative transactions," he said.
Tenet reported a net loss of $9 million in the third quarter ending Sept. 30, officials reported. It was an improvement compared to a net loss of $3.66 million in the third quarter of 2017, but it was a drop from the $24 million in profits the company recorded in the second quarter.
The dip was largely attributed to drops in hospital net operating revenues which were $3.762 billion, down 2.9% from the third quarter of 2017. That was primarily due to hospital divestitures, partially offset by same-hospital revenue growth. Officials pointed specifically to ongoing softness in markets like Detroit.
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"Make no mistake, growth and operational excellence are my top priorities as it relates to hospital operations," Rittenmeyer said. "While we had some headwinds in all the malpractice settlements this quarter, as well as an impact from prior hospital divestitures, our growth is not acceptable."
Among the bright spots in their earnings: Segments of their business like Conifer, which improved its margins over 200 basis points in the third quarter, as well as United Surgical Partners International (USPI), which reported an 11.5% increase in earnings, he said.