Tenet On Road to Recovery

Tenet continues to cut so-called "controllable" expenses as well. The company took particularly aggressive steps in the latest quarter by trimming its hospital workforce by 2.7% and its corporate head count by almost three times that amount.

Now, Tenet looks well positioned to deliver yet another solid quarter. The company has already touted healthy volumes for October, while stressing that savings from recent staff reductions -- executed throughout the third quarter -- should be more pronounced this time around.

Even Genesis Capital managing partner Jeff Villwock, long critical of Tenet, feels somewhat optimistic now.

"The fourth quarter should be okay -- and maybe even better than okay," Villwock told TheStreet.com earlier this week. "They can have a reasonably good year in 2008, too.

"I've never talked about this company as a turnaround, and I still think that's premature," he added. "But I will give the operating team some credit ... They've bought themselves some more time."

Looking further ahead, Villwock suspects that Tenet will lower its aggressive 2009 projections and set more achievable targets. But he plans to profit from the company's improvement in the meantime.

Encouraged by Tenet's third-quarter update, Villwock covered his short position and now owns "a very small" long position in the stock.

"I got an email back from a friend" that day, he recalls. "'What happened?' he asked. 'Did hell finally freeze over?'"