Health Care's 10 Dumbest Things, Part Two

5. Tenet's Big Idea

Five years into an elusive turnaround, Tenet (THC Quote) finally figured out how to make the numbers work.

The Texas-based hospital chain favors a new kind of math. Under this formula, investors simply throw out the company's Florida results and focus on what's left.

Granted, the company will still be suffering from weak admissions and, presumably, ongoing losses. But this way, the situation looks manageable at least.

Some see a slight problem with this approach, however. Namely, Tenet is excluding a core market -- accounting for one-quarter of its total beds -- that the company plans to keep.

"Keep in mind that for hospitals, if one were to exclude their weakest market, their results would look much better," observed Credit Suisse analyst Kenneth Weakley, whose past homework helped trigger Tenet's collapse. "A good analogy, applicable to many readers of this report, may be: How would the fund look if you could eliminate some of the stocks that went down?"

You can't blame Tenet for trying, though. As management stressed in its third-quarter update, Tenet's Florida market and its USC hospital -- which is embroiled in litigation -- "more than fully accounted" for the company's latest volume decline.

Unfortunately, experts view Florida as a key part of Tenet that ultimately has to be fixed. If anything, however, it seems be sliding into an even worse state of disrepair.

"Tenet will tell you things are getting better, based on some hokey survey, but they're really getting worse," one Florida physician told TheStreet.com earlier this year. In fact, "in all the years I've been here, this is definitely the low point."

So what are long-suffering Tenet shareholders to do? Judging from Tenet's stock price -- which has rocketed 75% in recent months -- they'll settle for new math.

Only Tenet could present a bandage as an outright miracle cure.

Dumb-O-Meter Score: 78. "The third quarter produced gratifying, tangible evidence that our turnaround strategies are working," declared CEO Trevor Fetter. "We are at last seeing evidence of the sustainable growth in profitability we have worked so hard to achieve."