Trevor Fetter retooled Tenet Healthcare to counteract a growth slump

Standardize services

Another program launched by Tenet in 2008, the Medicare Performance Initiative, is aimed at motivating physicians to standardize their treatment methods to cut costs, increase efficiency and improve patient outcomes.

Fetter and his team put together this initiative to address a number of inefficiencies they had observed both at Tenet’s hospitals and at other health care providers’ facilities: wide variations in the treatment of patients with the same condition, physicians ordering duplicate tests, overuse of supplies, keeping patients hospitalized longer than necessary and keeping patients on medication longer than necessary.

“Basically this initiative, which is ongoing and permanent, is a massive exercise in collecting data in order to show physicians that there’s tremendous variation in the ways they treat one person versus another who have the same medical condition,” Fetter says.

“In our business, lower cost usually equals better quality. Getting somebody out of the hospital sooner is better than leaving them in longer. You get them active again; you get them out of an environment where there are other sick people. The same goes for excessive amounts of tests and medications and everything else.”

The result at Tenet’s hospitals has been a gradual standardization of physicians’ patterns of care and treatment and the emergence of a set of best medical practices.

“What we are trying to do is to look at those variations, and where the variations do not help patients or help the cost of care, we are addressing them,” Fetter says.

With a system as large as Tenet’s — the company estimates that its hospitals and treatment centers amass 4 million patient encounters a year — the resulting standardization and efficiencies have produced a bounty of positive results for Tenet.

“We’ve had some staggering results,” Fetter says. “From 2009 to 2011, we saved $145 million. And we project that over a six-year period, going all the way through 2015, the cumulative savings will be about $375 million. So we’re talking about a tremendous amount of money.”

Go inside out

Among the other initiatives Tenet has launched in recent years, the company in 2008 formed a subsidiary, Conifer Health Solutions, to offer revenue-cycle services and patient communications to other hospitals and health care providers.

“Conifer represents a significant part of how we’ve dealt with our growth challenge,” Fetter says. “The idea for this came from the recognition that our company — and our headquarters in particular — was basically a service center serving 50 hospitals across the United States with a variety of services, and there was no reason we couldn’t provide those services to hospitals other than ours — and that this could be a vibrant business for us.”

The Conifer subsidiary has indeed proven to be a vibrant business for Tenet. Bolstered by several acquisitions, the fast-growing unit now serves almost 400 health care entities across the United States.

“Sitting here today, we have built the leading company in our industry that serves hospitals in the revenue cycle,” Fetter says. “This company that we started out of Tenet is on track to do more than $150 million a quarter in revenue, and it’s growing very rapidly.”

A lesson to be drawn from Tenet’s Conifer venture is that business leaders would be wise to keep their eyes peeled for opportunities to convert an in-house service into an outside revenue generator.

“The idea for taking these services outside of our company really germinated here within the leadership of our company,” Fetter says. “I’d had some prior experience doing something similar to this, and we decided to take it outside in a serious way at the beginning of 2008.

“So I’d advise other CEOs to examine the skills you have within your company and ask yourself if those skills can be used as a stand-alone line of business. That’s a concept that could work well in a lot of different markets.”

Ultimately, Fetter attributes his company’s emergence as an innovator in its field to his leadership team’s laser-like focus on Tenet’s customers’ needs and wants.