Tenet posts $44M net loss in Q2, increases reserve to settle kickback allegations

Dallas-based Tenet Healthcare reported a net loss of $44 million in the second quarter of 2016, compared to a $60 million net loss in the same period of 2015.

Tenet recorded revenue of $4.2 billion in the second quarter, up 0.6 percent from the same period of the year prior. The financial boost was driven by a 0.5 percent increase in adjusted patient admissions.

The hospital operator posted strong results in its ambulatory segment in the second quarter, with revenue attributable to this segment increasing 37.3 percent year over year.

Tenet said its Conifer Health Solutions and United Surgical Partners International subsidiaries both experienced double-digit revenue growth in the second quarter when compared to the same period of the year prior. 

However, after accounting for an increase in operating expenses and litigation reserves, Tenet ended the quarter in the red.

The for-profit hospital operator previously disclosed it is the subject of a criminal investigation by the Department of Justice. The criminal lawsuit arose out of a civil lawsuit filed under the qui tam provision of the False Claims Act. The suit alleges four Tenet hospitals paid illegal kickbacks to clinics that referred undocumented pregnant patients to them for Medicaid-covered deliveries. Undocumented patients are not eligible for regular Medicaid coverage. However, they typically qualify for emergency medical assistance when they deliver their babies.

Tenet believes it has reached an agreement in principle with the government to resolve the criminal investigation and civil litigation for $514 million. Based on the agreement, Tenet increased its reserve for the litigation from $407 million to $516 million.

The final resolution of the investigation and litigation is subject to the negotiation and execution of definitive agreements, according to Tenet. 

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