Becker's Hospital Review

16 CFO / FINANCE Tenet shrinks loss to $5M, plans new $200M cost-cutting drive By Ayla Ellison D allas-based Tenet Healthcare saw its rev- enue slide in the fourth quarter of 2018, but its net loss narrowed year over year. e for-profit hospital operator ended the fourth quarter of 2018 with revenues of $4.62 billion, down from $4.98 billion in the same period a year earlier. Tenet said the decline was primarily due to hospital divestitures and a 76 percent year-over-year decrease in net reve- nues from the California Provider Fee program. CMS approved the program in December 2017, which resulted in full-year 2017 revenues being recognized in the fourth quarter of that year. Excluding California Provider Fee revenues, patient revenues climbed 4.6 percent on a same-hospital basis from the fourth quarter of 2017 to the same period of 2018. When ad- justed for outpatient activity, same-hospital admissions were down 0.8 percent year over year in the fourth quarter of 2018. Aer factoring in operating expenses and one-time costs, Tenet reported a net loss at- tributable to shareholders of $5 million in the fourth quarter of 2018, compared to the $229 million net loss the company recorded in the same period a year earlier. "We delivered strong results in the fourth quar- ter and beat consensus expectations for revenue, Adjusted EBITDA and Adjusted EPS," Ronald A. Rittenmeyer, executive chairman and CEO of Tenet, said in an earnings release. Looking at full-year 2018 results, Tenet re- ported net income of $108 million on reve- nues of $18.3 billion. e company posted a net loss of $704 million on revenues of $19.2 billion in 2017. In December 2017, Tenet expanded a previous- ly announced enterprisewide cost reduction initiative to $250 million. A presentation pub- lished with the company's fourth-quarter financial results said Tenet realized $195 mil- lion of cost savings from the initiative in 2018 and expects an additional $55 million benefit in 2019 from annualizing the cost savings achieved by the end of last year. Tenet is continuing its cost-cutting efforts this year by launching a new $200 million cost reduction initiative. e company ex- pects to realize $50 million of savings from the new initiative in 2019, according to the earnings presentation. "2018 was a year of significant change for the company," Mr. Rittenmeyer said. "We mean- ingfully improved our financial results and made significant progress to create a more efficient, agile enterprise with new leadership helping to reshape strategy and drive consis- tency in execution. We expect to make addi- tional progress in each of our business seg- ments in 2019 in line with our plan to deliver long-term sustainable growth." n BJC HealthCare sees 61% drop in annual operating income By Ayla Ellison B JC HealthCare's total revenue increased last year, but the St. Louis-based system end- ed 2018 with lower operating income than the year prior. BJC recorded revenues of $5.3 billion in 2018, up from $5 billion in 2017, according to audited finan- cial documents. The increase was largely attribut- able to higher net patient service revenue, which climbed 11 percent year over year. Despite the year-over-year revenue growth, BJC saw its operating income decrease in 2018 after factor- ing in expenses. The system's expenses totaled $5.3 billion last year, up from $4.8 billion in 2017. BJC's operating income fell to $59.4 million in 2018, a 61 percent decrease from $154.3 million 2017. After factoring in a significant decline in investment income, BJC ended 2018 with net income of $105.9 million, down from $431.3 million in the year prior. n Geisinger, Highmark to build Pennsylvania hospital By Leo Vartorella D anville, Pa.-based Geisinger and Highmark in Pittsburgh have completed a joint venture agreement that will include construction of a hospital in Muncy Township, Pennsylvania. The three-story, 119,500-square-foot hospital will include a full-service emergency department, surgical suite, and multispecialty clinic. "One of the most exciting features of the new relationship be- tween Highmark and Geisinger is the way we will care for our patients and members," said Jaewon Ryu, MD, interim president and CEO of Geisinger. "We are transforming how care is deliv- ered in this new HealthPlex in Muncy Township. "Using telemedicine technology, patients will have access to specialists in Danville and across the Geisinger system with- out having to travel. This not only improves quality, access and convenience, but has the added benefit of reducing healthcare costs," Dr. Ryu said. Under the agreement, the systems will create a not-for-profit or- ganization that will serve a region spanning Clinton, Lycoming, Sullivan and Tioga counties in Pennsylvania. In addition to the new hospital, Geisinger and Highmark will build a two-story, walk-in urgent care center in Lock Haven, Pa. n

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