'Troubling' Turn for Tenet

Investors are still hoping for a decent global settlement instead. They pushed shares of Tenet up 4.5% to $7.54 on Wednesday, as the Alvarado saga finally came to an end.

Confession Time

Still, the government cracked down hard on Alvarado. Perhaps more striking than the steep fine is the "explanatory statement" Tenet made as part of the deal.

Tenet begins by describing the Alvarado case as a "sobering event" for the company, saying that it sparked major changes in the way the company -- and, in fact, the industry -- recruits physicians. The company then goes on to admit that Alvarado offered "relocation" payments that wound up in the hands of established physicians who never used the money for relocation purposes at all.

"We were distressed to learn that certain host physicians had obtained excessive payments by representing that they needed money to make tenant improvements to accommodate new physicians when in fact they never made improvements," Tenet stated as part of the settlement. "We regret that the hospital did not take adequate steps to assure that money provided to relocated doctors, including money earmarked for tenant improvements and office overhead, was in fact used for those purposes and in all instances was justified."

Tenet continues in the statement, "We have always had a disagreement with the government over whether anyone at Alvarado knowingly set out to violate the law in connection with these physician recruitments, but we have never disputed that there are aspects of how the recruitment program operated that are troubling."

Skolnick finds the rare confession telling.

"It wasn't just the feds making things up," she points out. "Clearly, there were problems at this facility."

Outstanding Issues

Selling it won't solve everything.

If anything, one former Tenet executive insists, other company-owned hospitals in Southern California -- particularly in the Los Angeles region -- offered even more troubling bribes. Tenet did not immediately respond to a question from TheStreet.com on this matter.