Tenet Selling Redding Hospital

Tenet (THC Quote) has agreed to sell its most embattled -- and once most profitable -- hospital.

Threatened with the loss of federal funding, Tenet's hospital in Redding, Calif., is now up for sale. The Redding facility, once prized for its profitable cardiac business, has been ailing for more than a year since it came under fire for allegedly performing hundreds of unnecessary heart surgeries. The hospital has already paid a record-setting $54 million fine to end a probe by the federal government. But it still faced exclusion from crucial government insurance programs, such as Medicare and Medicaid, if it remained under the Tenet umbrella.

In a deal reached this week with the government, Tenet committed to sell the Redding facility to a new owner within the next six months.

"Tenet has made the decision to sell the 269-bed Redding, Calif., hospital as part of an agreement with the Office of Inspector General in the U.S. Department of Health and Human Services, which has been considering a possible exclusion of Redding Medical Center from federal health programs," Tenet announced after the market closed on Thursday. "The company believes that, under these circumstances, a sale would be in the best interests of the hospital's employees, patients, physicians and the Redding community."

Thrilling

Fulcrum analyst Sheryl Skolnick has already predicted that Tenet, under fire from multiple government agencies, will have to sell all of its hospitals in the end. In the meantime, Jim Moriarty -- a Houston attorney who represents hundreds of Redding heart patients and survivors -- was quick to applaud the Redding deal.

"Our clients are going to be thrilled," said Moriarty, who scored a big settlement on behalf of Tenet's psychiatric patients during a similar scandal a decade ago. "Tenet could never regain the trust of the people in northern California. This will create more good faith than anything else Tenet could have done."