Tenet Healthcare announced it will sell eight hospitals in the U.S. and its nine hospitals and clinics in the United Kingdom, yielding up to $1 billion for the company, though breaking up the company’s three main business lines is also a possibility, according to outgoing CEO Trevor Fetter.
Presenting at the Baird 2017 Global Healthcare Conference on Sept. 6, Fetter said its U.S. divesture will involve four markets and will include the previously announced $170 million deal to sell its two Philadelphia hospitals to Paladin Healthcare. The names of the other markets and hospitals weren’t disclosed, though Fetter did say all of them are operating on thin margins of 4 percent or less.
That kind of financial performance has caused plenty of upheaval within Tenet in recent weeks. After posting an operating loss of $56 million in the second quarter, two representatives of its biggest shareholder, Glenview Capital Management, quit the Tenet board, suggesting a proxy battle may be brewing. The move led to the announcement Fetter would be leaving his roles as CEO and chairman by March 2018. Tenet also announces a “shareholder rights plan” that would allow other shareholders to buy shares at a 50 percent discount if any investor acquired 4.9 percent or more of the company.
Among the options for turning the company around is breaking it up around its main business lines: hospitals, ambulatory surgical centers and revenue cycle software. Fetter said investors are arguing both for and against such a plan, calling it "a lively debate that will and should take place” on whether operating Tenet as an integrated system is greater than the value of those lines on their own.
For now, its sticking to sales of individual hospitals. Fetter said the company hopes to announce definitive agreement on those transactions by the end of 2017.