Tenet Transfer Extends L.A. Saga

Tenet (THC) has "transferred" three of its hospitals to a group of insiders.

The company announced late Tuesday that Centinela Freeman HealthSystem, which includes a pair of Tenet hospital CEOs, has won the bid for three west Los Angeles hospitals. However, the company failed to disclose terms of the deal -- suggesting to some that it may have turned the hospitals over for free.

"The use of the phrase 'transfer of assets' suggests that this is the first transaction likely to show minimal proceeds to THC," wrote Fulcrum analyst Sheryl Skolnick, who has a neutral rating on the stock. "We think, in other words, that this is the first transaction in which Tenet is essentially giving the assets away to avoid future costs."

The hospitals -- Centinela Hospital Medical Center, Daniel Freeman Memorial Hospital and Daniel Freeman Marina Hospital -- are among 27 that Tenet is trying to shed this year as part of a massive restructuring effort. But the company has disclosed estimated proceeds from other transactions, including one announced Tuesday along with the Los Angeles sale. The company said it expects to receive $33 million, including the liquidation of working capital, for its Doctors Hospital of Jefferson in Louisiana.

A local community group, which sought the Marina hospital for itself, suspects that Centinela Freeman HealthSystem secured the Los Angeles facilities for nothing as well. The group, known as We CAHRE (which stands for Community Action for Healthcare Reform and Education), claims it was stonewalled in its own efforts to negotiate for the very Marina hospital that it saved two years ago when Tenet tried to shut it down.

Instead, We CAHRE says, Tenet favored a group of insiders from the beginning. Centinela Freeman HealthSystem is being chaired by a longtime Centinela board member, Michael Finnegan, who is perhaps best known as the former CFO and real estate developer for Hollywood Park racetrack. The group has named Centinela CEO Michael Rembis as the chief of all three hospitals. And it will retain Daniel Freeman CEO Harris Koenig as its senior vice president.