Tenet's ( THC) next quarterly update could give investors a scare.

Hammered by violent weather and mounting operational challenges, the big hospital chain is expected to deliver another quarterly loss when it issues results Tuesday morning. Even worse, some fear, the company could find itself unable to offer any real future guidance at all.

Clearly, Hurricane Katrina has delivered an excruciating blow. The powerful storm wreaked havoc on the company's New Orleans hospitals -- including one where state prosecutors have begun questioning dozens of employees about possible "mercy killings" carried out in the hurricane's aftermath, CNN has reported.

For its part, Tenet has portrayed its New Orleans employees as heroes and denied allegations of wrongdoing. Nevertheless, the situation there has already punished the company's bottom line and hit its tattered reputation.

Meanwhile, Tenet has found itself nursing serious wounds in even larger markets as well. Last week, Hurricane Wilma damaged all 14 of the company's hospitals in south Florida -- where hundreds of thousands of residents remain without power a full week after the storm passed through, local media reports say, including some who may not regain electricity until Thanksgiving. That lack of power has shut down doctors' offices and left hospitals scrambling to treat huge crowds of patients in their emergency rooms, which tend to attract the uninsured patients who often fail to pay their bills.

Tenet apparently faces big challenges in southern California, too. There, the company is reportedly in the process of slashing hundreds of people from its payrolls at hospitals that continue to struggle to make ends meet.

Given such a broad spectrum of problems, some experts have started bracing for an especially painful update. The company's stock inched up 4 cents to $8.29 on Monday but continues to trade near recent lows.

Chronic Pain

For now, analysts are simply doing their best to assess the company's third-quarter damage.

Morgan Stanley analyst Gary Lieberman sees plenty. He expects Tenet to report a third-quarter loss of 8 cents a share -- 3 cents worse than the consensus estimate -- due in part to serious disruptions at the company's six Gulf Coast hospitals. Still, he believes the company saw third-quarter admissions drop not only as a result of Hurricane Katrina but also because of "continued issues with physician retention" as well.

Tenet has pledged to court so-called splitter physicians who admit patients to both Tenet and non-Tenet facilities. But many physicians have told TheStreet.com that they continue to wait, in vain, for the company to reach out to them. Meanwhile, negative headlines -- including those about suspected mercy killings in New Orleans -- could further threaten Tenet's ability to win physicians over.

Lieberman isn't holding his breath for a breakthrough on that front right now.

"We expect it will take several quarters to see meaningful volume contribution from courting splitter physicians and stepped up recruitment," wrote Lieberman, who has an underweight rating on the company's stock. "It is not realistic to assume a quick turnaround in gaining back share from splitter physicians and in overcoming adverse publicity, in our view."

In the meantime, Lieberman believes that Tenet's same-store admissions fell by as much as 2% in the latest quarter. He also suspects that the company's same-store pricing turned lower, a prospect he finds particularly worrisome.

"While the company claims to be securing managed care rates in the high single digits now, a lower managed care census and shifts towards plans with higher discounts are negating these increases, in our view," he said. "From an operational perspective, the erosion in the managed care census -- and the direct impact on pricing and margins -- continues to be our primary concern."

Deep Cuts

Lieberman hopes that Tenet will address some of his worries on Tuesday.

For starters, he -- like many -- would like to know about Tenet's future plans for New Orleans. He notes that two of the company's New Orleans hospitals still remain closed, and he suspects that they will stay that way through next year as well. He has, therefore, lowered his future expectations for the company accordingly.

With its revenue base shrinking, Tenet must now rely even more on cost cutting to improve its bottom line. Some industry experts believe the company has already begun making serious staff cuts in southern California -- where labor costs run especially high -- and could wind up selling off more hospitals there in the end.

Meanwhile, Tenet continues to fight a huge courtroom battle in that same market. The company has spent months defending itself against charges of violating antikickback laws in a high-profile case that's nearing its end in San Diego.

Federal prosecutors there have accused Tenet of illegally bribing physicians in exchange for patient referrals. If they prove their case -- following a mistrial last time around -- Tenet could face harsh penalties and see its long pursuit of a global settlement with the government jeopardized. The company itself has denied any wrongdoing.

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