Spring Break
Innovation in a Difficult Marketplace
Trevor Fetter talks about improving quality, settling government litigation, and putting Tenet Healthcare back on a growth track
Lily Bradley (NA), Contributing Writer
Issue date: 3/3/08 Section: News
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Fetter briefly gave an overview of the situation he walked into in late 2002 when Tenet "blew up." During the week following November 7th, its share price dropped from $52 to $20 per share. Authorities raided one of its hospitals in Northern California gathering evidence that Tenet doctors had recommended unnecessary cardiac surgeries to boost income. Litigation was launched against Tenet for gaming Medicare billing policies that had produced in excess of $1B in revenues.
At that point, the Board brought Fetter back into the company as interim CEO. Fetter launched a rapid investigation to uncover the breadth and depth of troubles facing Tenet. Five weeks later, 80 percent of senior management had been implicated and had to be removed, including Fetter's longtime mentor.
Fetter outlined a straightforward turnaround and growth plan. In Phase I, the company had to stabilize. Tenet had to rebuild its reputation. Fetter opened a dialogue with all stakeholders (e.g. shareholders, patients, government, etc.) to settle litigation and build trust. He implemented a set of governance policies that earned Tenet an S&P 500 Riskmetrics Governance ranking of 99.4 percent.
Most importantly, Tenet had to refocus on providing consistent high quality care. Consistency built confidence among patients and doctors in the near term, but in the long term, Fetter saw that high quality services would be the company's differentiator in a difficult marketplace. Starting in 2003, Tenet invested $50M annually on quality improvement projects. In Phase II of the turnaround, Fetter expected quality and service line selection to lead to organic growth.
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