Tenet Is Raising Some Scratch

Instead, some now believe, Tenet may be jumpstarting its efforts. Villwock admits that Tenet must use at least some of its new money to purchase bonds, because it publicly promised to do so, but he suspects that the company is primarily trying to build up cash on its balance sheet for other purposes.

Eddleman questioned whether Tenet could even find takers for the new notes. But Villwock says the company already has. He says the yield, hovering around the 10% range, is "very attractive to certain types of investors."

Villwock remains concerned about equity holders, however. He believes that some investors are banking on an HCA (HCA - Cramer's Take - Stockpickr)-like turnaround that may never materialize. HCA, Tenet's larger peer, managed to recover from its own Medicare fraud scandal and move on.

"Yes, HCA did it," Villwock conceded. "But HCA had a real history of operating hospitals and doing it well. This company has no record -- ever in its corporate history -- of operating hospitals and doing it well without playing games. ... It's not a foregone conclusion that this management team can all of the sudden turn this company around."

Still, Villwock does believe that current management will find a way to strike a deal with the government -- with penalties paid out over time -- and still keep those at the top out of jail.

"Only in America can you steal from the government and then get a loan from the government -- that's tax-deductible -- to pay the money back," Villwock said. "It is a bizarre system that only encourages health care fraud."

Tenet's stock inched up 10 cents to $12.55 on Tuesday.