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To: RockyBalboa who wrote (17376)	12/3/2002 5:34:51 PM
From: Dale Baker	Read Replies (2) \| Respond to of 18998

Market sure isn't amused with their new guidance: 16:03 ET THC Tenet Healthcare guides lower for FY03 (17.84 -0.08) Company now expects that earnings per share from operations will likely be in a range of $2.38 to $2.78 per share -- Multex consensus estimate is for earnings of $2.86 per share. Tenet Healthcare: Profits Will Fall Short Tuesday December 3, 5:26 pm ET LOS ANGELES (Reuters) - Embattled hospital operator Tenet Healthcare Corp. (NYSE:THC - News), warned on Tuesday that its fiscal 2003 and 2004 profits will fall short of expectations due to lower insurance reimbursements. Tenet, reeling after two of its doctors were accused of excessive surgeries and under the shadow of a U.S. government probe into pricing at its hospitals, spelled out the new forecasts in a call with investors. Jeffrey Barbakow, chief executive officer of the No. 2 hospital chain, said he was working on "what went wrong (at Tenet) and how I failed to see it." For the fiscal year ending in May, Tenet said it expects to earn $2.38 to $2.78 per share, short of its estimate last month for a profit of at least $2.93 per share. For fiscal 2004, Tenet sees a "base case" EPS of $2.00 per share, well below the average Wall Street estimate of $2.93, according to market research firm Thomson First Call. Tenet said the 2004 estimate "should be viewed as a midpoint in a wider range" and will depend on underlying assumptions, including estimated total Medicare "outlier" payments of $150 million -- far short of the fiscal 2002 total of $763 million for such payments. Outlier payments are payments for unusual or higher than average patient costs -- usually very ill patients. U.S. authorities are investigating allegations that Tenet, based in Santa Barbara, California, overbilled the government to treat Medicare patients. The company is also renegotiating contracts with private managed care companies. PER DAY CHARGES Tenet also said it will stop using gross charges as a basis for charging managed care companies for services. HMOs have gotten stung because those payments are sticker prices that are generally inflated. In its place, Tenet will use per diem, or a daily fixed fee for hospitals, when charging health plans, it said. Trevor Fetter, who was recently installed as Tenet's president in the wake of the scandal, said at first he assumed Tenet would have to slash charges. Now he is not so sure, instead suggesting Tenet will seek "simpler contract structures." "It is inevitable that certain payers will take advantage of the situation and criticize Tenet over higher charges," Fetter said, speaking of managed health care plans. Tenet recently completed new deals with Aetna Inc. (NYSE:AET - News) and Health Net Inc (NYSE:HNT - News). Hospitals in recent years hiked up fees on rising demand, more clout in local markets and rising health premiums. Investors have sold off Tenet stock over concerns about the investigations and payment sustainability, sending the shares down more than 60 percent since Oct. 25, the last trading day before a UBS Warburg downgrade related to the payment issue. The shares closed up 8 cents at $17.84 in trading on the New York Stock Exchange. Barbakow said that, besides the Redding, California hospital where the allegations over doctors' abuse is playing out, admissions at its 113 hospitals has not fallen off in recent months. Officials acknowledged though, that it has a way to go to restore credibility among the public and investors. "The company is under a microscope and we know it," Fetter said.