took another plunge in the late session following the departure of its chief operating officer and chief financial officer and strong criticism of the company's pricing strategies from its own CEO.
The Santa Barbara, Calif., health services provider, which had seen its market capitalization more than cut in half in a week after disclosing an FBI probe into two of its doctors, said Chief Operating Officer Thomas Mackey will retire, while Chief Financial Officer David Dennis resigned.
After closing the regular session at $27.95, Tenet's shares were quoted at $19.50 on after-hours Island trading.
The company named Trevor Fetter, an executive with its spun off Broadlane unit, to the new position of president. He will remain chief executive and chairman of Broadlane. Stephen D. Farber was named chief financial officer.
Chief Executive Jeffrey Barbakow said in the release announcing the shakeup that Tenet had been too aggressive in some of its pricing practices, and the new management would take a "fresh look" at how the company charges for hospital services.
"As I carefully studied our Medicare outlier situation over the last two weeks, it became clear to me that formulas that drive these outlier payments were affected by our overall pricing," he said, referring to government reimbursements for expensive procedures. "In some cases, particularly aggressive pricing strategies created increasing outlier payments. That's simply not the way I want to do business at Tenet, nor do I want such a perception to exist in anyone's mind.
"While our pricing approach was entirely consistent with the Medicare regulations, it put us on a course that was inconsistent with the position and posture we want Tenet to have within our industry," Barbakow said. He said the moves don't imply the company's fundamental strategy if flawed or that any impropriety had occurred.
Tenet affirmed its earnings estimate for fiscal 2003 and said it expects earnings per share from operations to grow at least 25% over the comparable fiscal 2002 figure of $2.34 per share. It said that it must complete further analysis before it can provide long-term guidance.