Dallas-based Tenet Healthcare's Executive Chairman and CEO Ron Rittenmeyer announced the company would lay off 2,000 employees and divest more than $1 billion in assets in an attempt to improve its financial performance. Mr. Rittenmeyer made the announcement at J.P. Morgan's Healthcare Conference in San Francisco, Jan. 8 to Jan. 11.
Here's what you should know:
1. Mr. Rittenmeyer announced several initiatives at the conference. Among them is a plan to realize $250 million in annualized run-rate savings by the end of 2018 by laying off 2,000 workers, which is an increase from the 1,300 positions the company originally planned for, the Dallas Business Journal reports.
The company said the reduction plan will streamline Tenet's hospital operations as well as the operations of Tenet's Conifer and United Surgical Partners International holdings.
2. Tenet is also in the process of divesting multiple non-core markets and assets. Mr. Rittenmeyer said the divestitures are on track to yield an excess of $1 billion in net proceeds.
3. In addition, Tenet is exploring the possibility of selling its healthcare management company Conifer in a way that'll ensure Conifer is "in the best position to continue to provide quality service to its clients."
4. Finally the company anticipates reducing its leverage in advance of any debt maturities. Tenet is targeting five times or less by the end of 2019.
5. Mr. Rittenmeyer expects the new tax law will benefit the company in the the next two to three years because of its lower corporate tax rate.
In a company release, Mr. Rittenmeyer said, "Tenet is operating with urgency, accountability for performance and a relentless focus on quality care, patient satisfaction, cost management and compliance. We are focused on flattening and simplifying our enterprise, growing our hospital and ambulatory positions in attractive markets and reducing costs to improve our financial performance and enhance returns for our shareholders. … We will continue executing on these strategies, which we believe will best position Tenet for future growth and success."
6. However, in an interview with the Wall Street Journal, Mr. Rittenmeyer alluded to the cuts and divestitures by saying, "I am not a caretaker. My objective is to clearly reshape the company so that we are more effective, more efficient, more focused on patient care and doing what we’re supposed to do to return to our shareholders the right kind of value."
7. Tenet's stock opened Jan. 8 at $15.33. It closed at $14.99. As of 11 a.m. EST Jan. 9, it was trading at $14.88.