Becker's Hospital Review

25 CFO / FINANCE Tenet to Cut 700 More Jobs, Says $1B Divestiture Plan Is on Track By Ayla Ellison D allas-based Tenet Healthcare is under pressure from activist shareholders and is moving quickly to revamp its business. Aer reporting a net loss in the third quarter of 2017, Tenet launched a $150 million en- terprisewide cost reduction initiative, which involved renegotiation of contracts with sup- pliers and vendors, as well as the elimination of about 1,300 jobs. In December, the company expanded the cost-cutting plan to $250 million, but did not disclose whether additional jobs would be cut. In a presentation to investors at the J.P. Morgan Healthcare Conference in San Fran- cisco on Jan. 8, Ron Rittenmeyer, executive chairman and CEO of Tenet, said 2,000 jobs, or about 2 percent of Tenet's workforce, would be eliminated under the cost-cutting plan. Mr. Rittenmeyer also discussed other actions Tenet is taking to improve its finances, includ- ing the divestiture of hospitals in non-core markets. He said the program, which is expect- ed to yield more than $1 billion of proceeds, is on track, and divestitures will be completed throughout 2018. e plan includes the sale of Tenet's minority interest in a joint venture with Dallas-based Baylor Scott & White Health. Tenet is also exploring the sale of Conifer Health Solutions, its healthcare business ser- vices subsidiary. e company said in Decem- ber it expects to decide whether to sell Coni- fer during the first half of 2018. "Tenet is operating with urgency, accountabil- ity for performance and a relentless focus on quality care, patient satisfaction, cost manage- ment and compliance," Mr. Rittenmeyer said in a statement. "We are focused on flattening and simplifying our enterprise, growing our hospital and ambulatory positions in attrac- tive markets and reducing costs to improve our financial performance and enhance re- turns for our shareholders." e for-profit hospital operator ended the third quarter of 2017 with a net loss of $367 million on revenues of $4.59 billion. at's compared to the same period of 2016, when the company recorded a net loss of $8 million on revenues of $4.85 billion. n Baylor Scott & White to Close Texas Hospital, Affecting 711 jobs By Ayla Ellison B aylor Scott & White Medical Center-Garland (Texas), part of Dallas-based Baylor Scott & White Health, will close in early 2018. The 113-bed hospital will stop admitting new patients Feb. 16, 2018, and the facility's last day of operations will be Feb. 28. Any patients remaining at the hospital on the date of closure will be transferred to another acute care hospital within Baylor Scott & White Health's network. Baylor Scott & White decided to close the hospital after scaling back ser- vices and trying to secure a new owner for the facility without success. "The hospital has incurred significant financial losses over the last three years, and the trajectory of the loss is now unsustain- able, as last fiscal year's loss was more than five-times the loss in- curred the prior fiscal year," the health system said in a statement to Becker's Hospital Review. Although the hospital is closing, Baylor Scott & White and its af- filiates will continue to offer medical care, including family med- icine, cardiology, imaging, orthopedics and outpatient rehabili- tation, to the Garland community. The hospital closure will affect 711 employees, but the health system intends to place many of the employees in comparable positions at other facilities in its network. After the hospital closes, patients in the area will still have ac- cess to many nearby medical facilities. There are 71 urgent care centers, 48 ambulatory surgery centers, 21 hospitals and 11 freestanding emergency departments within a 12-mile radius of Baylor Scott & White Medical Center-Garland. n Hospital Loses Tax-Exempt Status After Inking JV With For-Profit Company By Ayla Ellison T he IRS revoked an acute care hospital's tax-ex- empt status after the hospital entered into a joint venture agreement with a for-profit com- pany, according to The National Law Review. Various details have been redacted from the recently released final adverse determination letter, including the hospital's name, but the letter is clear that the hos- pital lost its 501(c)(3) status for entering into a lease agreement in a manner that was incongruent with its tax-exempt status. According to the IRS, the nonprofit hospital leased its property, land and equipment to the for-profit entity. The hospital also gave control of its operations to the for-profit. The IRS noted that to keep its tax-exempt status, a hospital must retain control of the joint venture when entering into an agreement with a for-profit entity, which the hospital in this situation failed to do. Although the for-profit company agreed to maintain the hospital's charity care policies, the IRS revoked the hospital's tax-exempt status because the facility was not operated exclusively for a tax-exempt pur- pose. The IRS determined the lease agreement re- sulted in the for-profit entity deriving private benefit that is inconsistent with tax exemption, according to the report. n

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