Saum Sutaria told investors that the organization has "differentiated" itself from its peers, allowing it to better navigate the regulatory climate.
Tenet Healthcare's leadership believes the hospital operator is prepared to deal with policy changes that could be coming from Washington.
CEO Saum Sutaria spoke on a call with investors after the health system reported its fourth quarter and year-end earnings, expressing some optimism that Tenet's portfolio realignment has it in a better position to handle regulatory headwinds.
Tenet recorded $3.2 billion in net profit for 2024, compared to $611 million in 2023, while bringing $20.7 billion in net operating revenue. The company called the full-year financial performance "outstanding."
On the earnings call, Sutaria stated that the system continued to shift its portfolio by selling 14 hospitals and adding nearly 70 ambulatory surgical centers in 2024. Tenet plans to invest approximately $250 million each year towards the ambulatory space and expects to add 10 to 12 centers in 2025.
By moving its focus away from hospitals and towards the ambulatory surgery center (ASC) business, the system is likely to be less impacted by changes like site-neutral payments, Sutaria noted.
"We have demonstrated an ability to perform well in a variety of operating environments, and believe we are differentiated from our peer set as we navigate potential changes going forward," Sutaria said. "For example, our ASCs operate with freestanding ASC rates, which insulates that important part of our business from potential changes in site neutrality rules."
Meanwhile, Tenet's ASC business, United Surgical Partners International (USPI), has minimal exposure to Medicaid, putting it at less risk of being significantly affected by Medicaid reimbursement rate cuts or other alterations to the program, according to Sutaria.
"So, from a USPI perspective, this is all about an important tailwind of moving things into a lower-cost setting in an expensive portion of the care industry, which is surgical care, and doing so in a way where we're constantly increasing the acuity of the work at USPI because it creates more value for the purchaser," he said.
Though Sutaria recognized that Medicaid policies will have a greater impact on the hospital side, he stated that restructuring the acute care businesses in anticipation of changes would not be the right move.
Rather, Sutaria stressed the importance of advocating for Medicaid and how it improves access to care, so federal and state regulators feel compelled to preserve it.
Issues that the government has over Medicaid, such as fraud and abuse, were also likely helped by the Medicaid redetermination process, Sutaria highlighted.
"I think one thing that people may find is that Medicaid redeterminations over the last couple of years have probably done a lot to reduce the number of people eligible or not eligible who happen to be on Medicaid," he said. "So no way to predict for sure, but I'm somewhat comforted by the fact that some of that work has already been done through this redetermination process."
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
For its 2024 finances, Tenet Healthcare managed $3.2 billion in net profit and $20.7 billion in net operating revenue, which was deemed "outstanding" by the health system's executives.
Tenet's shift from hospital services to ambulatory surgery centers is helping to insulate it from reforms like site-neutrality payments and Medicaid cuts, CEO Sam Sutaria touted.