Cover Story
Deep healing
How Trevor Fetter turned around Tenet Healthcare
By Kristy J. O’Hara
Smart Business Dallas | July 2009
Page 1 of 3
Trevor Fetter used to work in the movie industry, but he had no idea that the drama at Tenet Healthcare Corp. more closely resembled a movie plot than a hospital system.
First, there was a crisis with investors because Tenet had been pursuing a strategy that resulted in significant earnings growth but wasn’t sustainable. When a research analyst wrote about it, the stock price plummeted from $50 to $30 a share in just a few days.
Two days after that, the FBI raided one of the company’s hospitals because of an investigation into whether two physicians had performed unnecessary cardiac procedures when alternative treatments may have been available.
At this point, the then-CEO asked Fetter to return to the company after a nearly three-year absence. Two weeks after returning, the FBI led a raid on another hospital because of an investigation into the company’s hiring practices.
“I would say that by when I first came in, it was mid-November 2002, the first two shoes had dropped,” says Fetter, now president and CEO. “Little did anyone know that there were further shoes that would drop, and by the end of December 2002, I felt I had just begun to get my arms around what kind of challenges the company was facing.”
In 2003, Tenet was not only performing below the national average in clinical quality, but it was a mess financially, too. Net operating revenue dropped from $7.86 billion in 2003 to $7.77 billion in 2004, and its loss increased from $1.15 billion to $1.18 billion in that same period. When you think things can’t get worse, think again: Tenet had 10 percent of its revenue and 6 percent of its employees in New Orleans-area hospitals, so when Hurricane Katrina hit in 2005, it was a devastating blow to the system.
In short, turning Tenet around wasn’t going to be easy.
“I dug in,” he says. “It got a lot worse. In addition to the company’s own problems, the industry, it turned out, was really peaking at that time in 2002 and early 2003, and from 2003 through 2008, it has been under steady pressures that have not been seen in a decade. It’s been a very tough operating environment, and it was also a tough cleanup job.”
