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Tenet Healthcare Corp. reported a promising start to the year with growing patient demand in acute and ambulatory care.
CEO Dr. Saum Sutaria emphasized the Dallas-based for-profit system’s commitment to expanding ambulatory care on Tuesday’s earnings call, despite the system being about a year behind on expansion plans stemming from a $1.2 billion deal with SurgCenter Development announced in 2021. As part of the deal, Tenet and its United Surgical Partners International subsidiary agreed to take an ownership stake in 92 ambulatory surgery centers.
“The original plan is still the original plan,” Sutaria said during the call.
United Surgical Partners added three centers in the first quarter and logged a 7.9% year-over-year increase in same-facility surgical cases, showing strength in gastrointestional, urology and orthopedic procedures, CFO Daniel Cancelmi said on the earnings call. The health system plans to invest at least $250 million in ambulatory care each year.
Cancelmi said opportunities exist for margin improvement in acute care. The segment reported a 4.3% increase in same-hospital admissions. Non-COVID admissions alone were up 14%. Sutaria also noted Tenet’s efforts to improve efficiency in its emergency rooms.
“I think that as we get into this post-pandemic environment, hospitals are going to naturally be able to hold onto and deliver when they have put in the right infrastructure, doctors and technology for higher-acuity services that don’t have a substitute location to go to. And for us, that’s an important piece of the recovery puzzle,” Sutaria said.
Tenet reported first-quarter net income of $143 million, or $1.32 per share, compared with $140 million, or $1.28 per share, a year ago.
Revenue increased 5.8% to $5.02 billion. Operating expenses rose about 8% to $4.48 billion, not including any facility sales or consolidations, with costs jumping 13.5% for supplies and 3.5% for salaries and wages. Executives said they expect contract labor costs to further moderate throughout the year, although those costs are unlikely to return to pre-COVID levels.
Tenet raised its financial outlook for adjusted earnings before interest, taxes, depreciation and amortization by $50 million, to a range of $3.21 billion to $3.41 billion—making it the second for-profit after HCA Healthcare to increase expectations for 2023.
Shareholders reacted favorably. Tenet shares jumped more than 4% from Monday’s close to open at $72 per share on Tuesday.