Tenet On Road to Recovery

Still, Tenet has relied on escalating prices with disastrous results in the past. Some critics pounced on that strong metric as a result.

Credit Suisse analyst Kenneth Weakley, who exposed the aggressive pricing games that led to Tenet's collapse, was among that camp. Weakley has long recommended selling Tenet's stock, which he currently values at a Street low of $2 a share. The stock closed at $4.64 Wednesday.

"On the fifth anniversary of THC's infamous conference call (11/7/02) disclosing the nefarious impact of its gross charge pricing strategy, we would remind investors that 'pricing stories' in the hospital industry have a less-than-perfect history of creating long-term value," cautioned Weakley, whose firm has investment banking ties to the company. "Volume and patient mix are keys. And more history is needed before one can point to a new trend."

Healthy Results

For its part, however, Tenet feels that it has delivered broad-based improvement -- extending well beyond pricing -- that signals a lasting turnaround.

The company's third-quarter admission decline, especially among lucrative commercially insured patients, ranked as its smallest in recent memory. Moreover, it marked its second major quarterly improvement in a row.

Excluding its especially troubled hospitals, in fact, Tenet actually saw admissions climb a bit.

Granted, some of that volume resulted from uninsured patients who often fail to pay their bills. But that business no longer hurts Tenet as much as it once did. Thanks to a major improvement in its collection rate, Tenet managed to hold its third-quarter bad-debt ratio steady despite an ongoing rise in patients who lack health insurance.