Tenet to focus on further reducing contract labor as it declines to 4.3% expense

Dallas-based Tenet Healthcare, which reported second quarter net income of $123 million July 31, said it will continue to focus on driving contract labor costs further down.

Such costs were reduced to 4.3 percent of the health system's total salaries, wages and benefits expenses during the quarter, CEO Saum Sutaria, MD, said on an earnings call. Salaries, wages and benefits expenses overall rose 7.5 percent from the previous year in the quarter to total $2.3 billion.

The 4.3 percent contract labor figure compared with 6 percent in the first quarter, 7.3 percent in the fourth quarter of 2022 and 6.2 percent in the second quarter of 2022, said Dan Cancelmi, CFO, who described the current 4.3 percent figure as "a significant decline," according to a transcript of the call from Thomson Reuters.

"If contract labor costs and premium labor costs continue on the path of normalizing, we think we will have additional room for volume growth as we look forward," Dr. Sutaria said on the call.

Capacity growth on the hospital side of Tenet Health's business will come as contract labor costs continue to decline, he added.

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