HOSPITALS: Can Tenet really afford $1 billion to settle?

Those dumb speculators who gave up on Tenet when its stock fell to $9, should have hung on. In the past week it’s been up as high as $13. However, that may all change with the reports that Tenet is discussing a global settlement with the Federal government of around $1 Billion to settle claims that it defrauded Medicare. Even if it sells all its California hospitals (for a guestimated $600m) and it dips deeply into its credit line (which is around $800m), this certainly puts Tenet in a very tough spot. If the number required to keep operating and to be allowed to stay in the Medicare program is that high, you have to suspect that the company will have trouble surviving. And back when I was losing money on its stock it allegedly had only $30m put aside for this settlement.

Meanwhile not many questions about the settlement were raised at the Tenet shareholders meeting, which Matt Quinn reviewed recently in TCHB. Perhaps shareholders should have been paying more attention.

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