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This page examines the massive incentives offered to
administrators, the excessive salaries, bonuses and perks
provided to executives, insider trading, political
donations, and the many court actions taken against the
company.
Hitting financial targets, a current Tenet executive said, was "how you were judged, paid and evaluated." LA Times December 12, 2002
This web page deals with a number of
additional issues.
Financial incentives have been probably the most dangerous of
business practices. They have been at the root of the majority of
major frauds and the misuse of patients. They are also the key to
market success. National Medical Enterprises in the 1990s and Tenet
in 2002 relied heavily on financial incentives as rewards for success
and "beatings" of one sort or another for failures. Tenet paid its
hospital executives large salaries but most doubled this with
incentive payments and bonuses.
Swollen headed company executives and board members have paid
themselves massive salaries, bonuses, and perks even when the
company was performing poorly. Tenet has led the pack. Underpaid and
overworked Tenet nurses providing under-resourced care have been
incensed by this.
When companies fail insider trading is common in the preceding
period. Allegations and court actions usually follow. Tenet's
collapse surprised insiders and there was little opportunity. The SEC
set up an process to investigate and monitor Tenet. It took action
reaching a settlement.
Political links and donations to politicians are common but
Tenet is secretive about this. Documents tabled in court show that
Barbakow is a "Bush pioneer", one of those raising over US $100,000
for Bush. Government and political links and support emerged after
the 2002 scandal. In 2007 a recent democratic presidential candidate,
and the current republican president's brother, recently resigned as
governor of Florida are both members of Tenet's board.
Hundreds of court actions have been commenced against Tenet,
Barbakow, directors and doctors. Most relate to delay in disclosing
information, misinformation to the market, unnecessary procedures,
and price gouging.
Dangerous Business Practices :: Dangerous incentives
Remuneration
packages
Insider
trading
Political
Links
Court
Actions
Massive bonuses and incentives directly
linked to profits or to the financial performance of units were the
key drivers to the financially successful
fraud in NME's hospitals
(4.2)
in the early 1990's. They have been an integral component of many of
the fraudulent and patient misuse scandals of the last 12 years.
Reviews have criticised the practice. Corporations have repeatedly
claimed or promised to reduce incentives or to link them to care as
well as profits.
Incentives and bonuses, which capitalise on and foster self centred
greed are such a key component of modern business thinking and
success in the marketplace that this is seldom more than rhetoric. As
a consequence the ethic in the health sector undergoes a paradigm
leap from personal fulfillment through altruistic community service
to self realisation through ostentatious wealth.
As far as I am aware Columbia/HCA is the only large corporation which
acknowledged the role played by incentives in their fraud and then
abolished then. It is likely they were pushed into doing so.
The formula for financial success in health
care has been a strongly coercive corporate culture. Management has
been based on measurement and close monitoring of short term economic
performance.
Corporate profit objectives are specified in advance and the system
is put under strong pressure to meet them regardless of the method
used. NME called this "meeting
plan"
(4.2). Columbia/HCA used a system of
"score
cards". In HealthSouth the CEO simply
set profits to exceed analysts projections and
insisted
accountants meet this in their
reports.
Strong performance related pressures have been exerted down the
system using a carrot (incentives, bonuses and awards) and stick
(rebukes, loss of status and dismissal) approach. Success is rewarded
by public praise at corporate functions. All this is coupled with a
willingness at the top to turn a blind eye to the methods used down
the system to improve financial performance. The accolades for
profitability are so overwhelming that no one dare think let alone
question.
Tenet like HealthSouth seemed to pay little attention to corporate governance.
But Tenet critics take little comfort in such endorsements and outright ridicule the company's own "Circle of Excellence" awards for hospital administrators. They claim that Tenet has showered the prizes on hospital executives who've placed profits ahead of patient care. And they point to allegations looming over two recent recipients of "Circle of Excellence" prizes -- one hospital is suspected of performing unnecessary surgeries and another has been accused of paying illegal doctor kickbacks -- as evidence of their theory.One former hospital executive, who collected a string of the awards himself, insisted that his own facility committed no wrongdoing under his leadership. But he also admitted that he has watched Tenet's recent collapse with more dismay than shock.
"I know how Tenet operates," he said simply. "Some people are really too aggressive."
Whistleblower Wants Tenet to Come Clean The Street.Com (Melissa Davis) Jul 25, 2003
"When those types of numbers get reported back to the home office, does everyone stay willfully blind and declare a holiday, or does someone say, `Let's postpone the celebration and take a hard look at these,' " said Neil Getnick of Getnick & Getnick, which specializes in business integrity counseling. "Part of business integrity is creating reasonable expectations amongst shareholders of what kind of profits you can achieve, and what we have seen with Tenet indicates that the company departed from that basic model."
How One Hospital Benefited on Questionable Operations New York Times (KURT EICHENWALD) August 12, 2003
Apparently, neither Tenet nor Ms. Sulzbach saw any conflict in her wearing two hats as Tenet's general counsel and chief compliance officer. As general counsel, Ms. Sulzbach zealously defended Tenet against claims of ethical and legal non-compliance, e.g., the April 2001 qui tam suit, while as chief compliance officer, she supposedly ensured compliance by Tenet's officers, directors and employees. It doesn't take a pig farmer from Iowa to smell the stench of conflict in that arrangement
Letter Senator Grassley to Trevor Fetter September 5, 2003
In another blow to Tenet Healthcare Corp., a U.S. Senate committee that oversees federal health programs said that the company may be "ethically and morally bankrupt," and that it has begun investigating the company's "corporate governance practices."
Senate panel is investigating Tenet September 8, 2003 Wall Street Journal
Pearce also resounded the committee's claim that Tenet practices "Wall Street medicine," valuing dollars more than quality care. He concluded the report saying, "Tenet's decline is the direct result of greed and arrogance on the part of past senior management, aided and abetted by a dysfunctional board."
--------------------
He (Fetter) said in some cases that the company had "seemed to confuse what was legal with what was right."
Troubled times for Tenet: Company's future in doubt : The nation's second largest hospital chain is in deep debt and deep trouble. Will it survive? And will physicians get hurt if it doesn't? AMNews April 19, 2004.
NME under Barbakow's predecessor, Richard
Eamer was one of the best examples of how these
management structures
(4.2) foster a culture based on greed and
a willingness to do whatever it takes to meet objectives regardless
of the legality or consequences for others. Large numbers of people,
many of them children were conned into coming for mental health
assessments and then needlessly incarcerated in psychiatric hospitals
for long periods of time. Here they were subjected to vast amounts of
treatment which they did not need. NME staff were rewarded for doing
this.
It is clear from the reports that Barbakow
used exactly the same management structure. The wording of its
business plan "Target 100" speaks for the way it was done. Incentives
of up to 50% of salary were a key component. The information points
to consequences similar to those in NME in the 1990s for patients in
Tenet's hospitals in 2002. This time it involves high risk cardiac
procedures and the consequences have been far more serious.
The extracts below speak for what happened and why
But some investors and corporate governance experts believe Tenet's problems are at least partially the result of the aggressive profit-driven culture fostered by Barbakow himself.
----------------------------
How responsible is Barbakow for the mess at Tenet? He backed an incentive plan under which hospital CEOs receive cash bonuses tied largely to exceeding profit and revenue growth targets. In fact, cash bonuses represented half of all the compensation hospital chiefs earned in 2001. That incentive plan, critics charge, may have led to abuses.
-----------------------
"If you have a CEO who claims he doesn't understand where his revenues and profits are coming from, you need to change your CEO fast," says Lynn E. Turner, director of the Center for Quality Financial Reporting at Colorado State University. A Scandal-Ridden Tenet Stands by Its Man BusinessWeek magazine NOVEMBER 25, 2002
Last February, more than 1,000 Tenet Healthcare Corp. employees from around the country gathered in Las Vegas to talk about Target 100, the hospital company's quality excellence program. But to some participants, the three-day affair at Caesars Palace felt more like an overwrought company bash. (Note that in the earlier 1990's scandal, words like quality and excellence referred to financial performance not patient care. Has Tenet changed the way it uses words?)
---------------------------
Even among for-profit hospital operators, the Santa Barbara-based company led the pack, not only with programs such as Target 100 but also in the way it raised hospital charges, rewarded hospital executives with bonuses that matched their annual salary and went after high-profit lines of medical services.
Some of Tenet's aggressive business practices have come to light in recent weeks, as Tenet's stock has wilted amid an audit by Medicare regulators and an FBI investigation of two doctors at a Tenet hospital in Redding.
----------------------------------
Even so, some Tenet insiders and analysts think that the makings of the company's current crisis stem from an aggressive corporate culture, fostered at the top, that encouraged hospital managers and others to push short-term profits to the hilt.
One prime example is how executives are paid. In Tenet's last fiscal year, chief executives of the company's 113 hospitals in the U.S. had an average salary of $200,000. But collectively, the company confirmed, they doubled their pay with cash bonuses, mostly for boosting their hospital's earnings. And that doesn't include stock options.
---------------------------------------
"The incentive plan is designed to encourage CEOs to make sure to meet business goals and get a good return to add additional capital," Ewalt said.
-----------------------------------
Some current and former Tenet hospital managers painted a different picture of the financial pressures. One former senior executive of a Tenet hospital said that corporate expectations to grow earnings were intense, and that failure to make budget goals was sometimes met with a grilling at monthly meetings. Hitting financial targets, a current Tenet executive said, was "how you were judged, paid and evaluated."
----------------------------------------
This strategy "reflects a very short-term thinking of maximizing a revenue draw and not giving consideration to long-term ramifications," said Tim Moran, chief executive of nonprofit Mercy Hospital in Bakersfield and a longtime Tenet employee who left in 1994.
--------------------------------------
In Moran's view, as well as that of some doctors and analysts, Tenet's business model may have encouraged hospitals to practice more aggressive medicine. If hospitals are paid a flat fixed rate, they argue, they will have incentives to manage care more carefully. But if hospitals know they are going to get paid a percentage of each procedure because the case has qualified for Medicare outlier or stop-loss payments, hospitals are likely to be less concerned financially about ordering additional tests and procedures. Tenet's Aggressive Corporate Culture Fed Crisis, Insiders Say :: The hospital operator's business practices, profit-based pay incentives come under scrutiny LA Times December 12, 2002
One of the characteristics of most of these
big corporate chains is the massive ego of the chief executives and
their executive staff. Not only do they become totally convinced of
their own infallibility but they also pay themselves massive bonuses.
They believe their expertise justifies this. While these are claimed
to be linked to performance they occur with remarkable regularity
just before the company is about to collapse because of
mismanagement.
NME had set a precedent with large salaries and bonuses even when the
company was doing poorly. Like other health executives retiring in
disgrace Richard Eamer received a massive golden handshake when he
resigned as CEO and was forced off the board of the company he
founded.
Its successor Tenet paid even better. Its CEO and chairman, Barbakow
was paid vast sums in salary, bonuses, options and even in additional
pension entitlements. Remaining senior executives wallowed in their
big bonuses. This multimillion dollar piggery incensed the underpaid
nurses who were acutely aware of the consequences of the cost cutting
which had resulted in this. They knew how badly money was needed for
care and how much more could be provided with this money.
Barbakow and other gluttons received a massive salary, bonuses,
options and many perks at the corporate banquet. In fairness to
Barbakow he did not receive bonuses after the company's collapse and
he waived a massive boost in his pension, awarded shortly before the
scandal broke. His colleagues continued to benefit.
2000
Total Compensation year ending March 2000
Includes salary, bonus, Long term incentive plan, all other payments
Barbakow US $3,056,182
Schochet US $1,091,142
Mackey US $1,839,655
Mathiasen US $920,367
Sulzbach, US $820,836
Data taken from http://www.multex.com/
2002
The Santa Barbara, Calif.-based firm plans to credit Jeffrey Barbakow with 20 years of service in 2004 even though he will have worked only 11 years, according to a recent filing with the Securities and Exchange Commission.
--------------------------
Barbakow, 58, received a salary and bonus of $4.5 million last year. (2001) He also sold $130.1 million of company stock in January.
In comparison, HCA Inc., Tenet's larger competitor, paid CEO Jack Bovender Jr. about $1 million in 2001.
------------------------------
By accelerating Barbakow's service, Tenet is enabling its CEO to collect annual payments of $1.9 million rather than the approximately $945,000 he would have received based on his actual years served, - - - - -
-------------------------------
"Jeffrey Barbakow is the poster child for corporate greed in the health care industry," said Rose Ann DeMoro, executive director of the California Nurses Association.
"Every dollar of that is diverted out of patient services," she said.
Barbakow has received about $400 million in total compensation and stock sales since joining the company, according to the CNA. That amount would cover 320,000 uninsured Californians for a year, pay the salaries of 9,000 registered nurses for a year, or get a year's supply of medicine to 43,000 AIDS patients, DeMoro said.
In addition to his salary, bonus and stock options, Barbakow received other compensation, which included personal use of a Tenet corporate jet valued at $66,962 and $34,090 for a company car in fiscal 2001. Tenet CEO receives lucrative boost to pension benefits The Associated Press Aug 27, 2002
"Nurses and other union members employed by Tenet Healthcare Corp. showed up at the company's annual shareholders meetings and lit into Tenet's executive-compensation practices, specifically the $111 million that Chairman Jeffrey C. Barbakow received after exercising stock options earlier this year," the Wall Street Journal reports. SEIU leader challenges Tenet executive pay excess (from SEIU web site)Wall Street Journal October 10, 2002
Investors are also upset over his benefitting from the Medicare controversy. His $4.2 million bonus last year was mostly a reward for boosting earnings by 113%, to $643 million on $12 billion in sales. He also sold $130 million worth of Tenet shares when it traded at 44 in January. A Scandal-Ridden Tenet Stands by Its Man BusinessWeek magazine NOVEMBER 25, 2002
Several Wall Street analysts have criticized Barbakow's compensation, saying that itself was a statement of the company's values. "When you pay the CEO so much money, you're saying, 'That's the game. Make as much money as you can,' " said Clifford Hewitt, a health-care analyst at Legg Mason. "At some point there's a spillover effect. We can't calculate it, but this kind of excess ... gets reflected somewhere in the behavior of the organization." Tenet's Aggressive Corporate Culture Fed Crisis, Insiders Say :: The hospital operator's business practices, profit-based pay incentives come under scrutiny LA Times December 12, 2002
Just weeks after Tenet (THC) Healthcare Corporation’s share price plunged more than 70%, the company’s board of directors granted 975,000 stock options to four executives. The options are worth between $10.8 million and $27.3 million, - - -
Even in this lean year for Tenet shareholders, the company increased the combined number of options granted to the four officers by 45% compared with the previous year. The recipients - - - Farber - - - - , Schochet - - -, Sulzbach - - - - .Mathiasen. TENET EXECUTIVES: REWARDS FOR POOR PERFORMANCE? Tenet Monitor SEIU www page December 18, 2002
Tenet - - said - - Barbakow hasn't been given a bonus or options since May 31, 2002, when he received a bonus of $4.2 million - - -.
- - -Barbakow also waived a lucrative retirement benefit that would have given him credit for two years of service for every year of actual work. Tenet Reports on CEO's Compensation LA Times May 9, 2003
(Added 2007) For now, Sulzbach continues to do quite well. During the company's last fiscal year, she collected salary and bonuses totaling more than $1.37 million. She also picked up 270,000 stock options for a seven-month "transition period" that ended in December. Even if she were to leave the company, she would still be entitled to her salary and target bonus for the next three years. She would also receive health insurance, a car allowance and "other benefits and perquisites," according to the company's proxy.
Top Lawyer Bailed Before Tenet Tanked The Street.Com (Melissa Davis) August 14, 2003
(Added 2007) In appointing new staff to get themselves out of the scandal Tenet followed its own and industry practice by once again offering massive remuneration and financial incentives. Incentives like these are based on economic success which is best achieved by cutting care where ever they can get away with it. In the marketplace they have to do this to survive and this contributes to the ongoing spiral of rising costs and poorer care.
In CEO Trevor Fetter's case the bonuses kept growing as the company lost nearly US $6 billion.
Fetter was paid a salary of $848,539, a bonus of $262,500 and contributions to retirement plans and insurance policies of $33,516, for a total of $1.1 million. He also received other annual compensation of nearly $1.3 million, primarily to reimburse him for a loss on the sale of his San Francisco home resulting from his return to Tenet as president in November 2002, the proxy said. Fetter also received restricted stock awards valued at $3.7 million, which will not fully vest until 2007, and 350,000 options to purchase Tenet stock. Former CEO Jeffrey Barbakow, who resigned May 26, 2003, was paid $585,231 in salary, $59,666 in other annual compensation, including $48,032 for automobile use, and $1.4 million in other compensation consisting primarily of severance pay and unused personal leave time, for a total of nearly $2.1 million.
Tenet proxy details director turnover, CEO pay Modern Healthcare's Daily Dose April 5, 2004
Tenet Healthcare Corp. CEO and President Trevor Fetter received a compensation package in 2004 of nearly $3.7 million, the company said in a regulatory filing.Fetter was paid $1.1 million in 2004, up from $848,539 in 2003. His bonus more than tripled to $864,749 from $262,500 in 2003. "Other compensation" came to about $1.7 million.
About $1.2 million of the other compensation was reimbursement for taxes Fetter paid when he sold his California residence to relocate to Dallas, the company said.
In addition, Fetter received restricted stock awards of about $1.1 million. The stock awards will become vested over three years.
Tenet reports CEO's compensation package Dallas Business Journal April 18, 2005
Tenet Healthcare Corp. (THC) said Monday that President and Chief Executive Trevor Fetter received a $1.17 million bonus for 2005, up from the $864,749 bonus he got for the previous year.The Dallas-based hospital operator said in its annual proxy filed with the Securities and Exchange Commission that Fetter's annual compensation also included a $1.07 million salary, restricted stock awards valued at $1.85 million and 469,333 stock options.
Fetter also received $376,201 in other compensation, including $200,222 corresponding to relocation expenses.
Tenet Healthcare CEO Got $1.17 Million Bonus For 2005 Dow Jones April 3, 2006
Tenet Healthcare Corp. said Monday that President and Chief Executive Trevor Fetter received total compensation valued at $9.5 million for 2006.
----------------------
- - - the pay package included stock awards valued around $3.58 million, option awards valued around $3.05 million, non-equity incentive plan compensation of $1.05 million and a salary of $1.08 million.
Tenet Healthcare CEO's 2006 total pay valued at $9.5 mln Apr 2, 2007 http://www.forbes.com/feeds/ap/2007/04/02/ap3575808.html
Corporate executives also have a canny ability to take up their options and sell shares only a short time before they claim to have become aware of adverse circumstances which cause company shares to plunge. It is of course illegal to sell shares when you have inside information but this is always denied and is difficult to prove.
(Added 2007) Insiders seemed to have a very good idea of what was going to happen after 1999 when they escaped from the restrictions imposed by their corporate integrity agreement, a time when the company was performing poorly. If the outlier payment was a carefully planned strategy they would have done their calculations and known what the effect would be. These were highly skilled businessmen and their claims to ignorance lack plausibility. They may well have considered the strategy legal, and it may well have been but it was unconscionable. Lawyers are poorly suited for ethics or integrity bodies. The concerns are ethical, moral or social rather than legal. These Tenet insiders all bought up the stock in 1999 and sold it before the strategy was detected and stopped. Shareholders were left to pick up the tab when it all came apart. No one is paying it back and no one is going to jail.
(Added 2007) Lead counsel Christi Sulzbach, who then doubled as Tenet's chief compliance officer, raked in $7.25 million through option transactions at a time when the company's prospects had never looked better.
--------------------------------
And the stock kept rocketing, allowing former CEO Jeffrey Barbakow to collect $111 million in a notorious insider sale just nine months after Sulzbach cashed in.Barbakow's stock transaction made him America's best-paid corporate executive in 2002. But Sulzbach had some bragging rights, too. Her own stock sales ranked among the largest carried out by in-house attorneys in 2001. And it made her one of the best-paid corporate lawyers in America that year.
Top Lawyer Bailed Before Tenet Tanked The Street.Com (Melissa Davis) August 14, 2003
(Added 2007) That summer, just two months after Tenet's corporate integrity agreement expired, Barbakow dug into his own pockets for money to buy 1.1 million Tenet shares. Trevor Fetter, who has since replaced Barbakow as interim CEO, purchased 31,300 shares. And Sulzbach herself, promoted early that year to general counsel, picked up 1,000 shares.By the following year, former CFO David Dennis -- fired last year for his role in the outlier billing scheme -- had jumped on the bandwagon as well. He purchased 27,000 shares just months after the company prevailed in a nasty proxy battle led by a Florida physician whose warnings have since come true.
"During the middle of the proxy contest, results from the [outlier] scheme, implemented in FY 1999 according to management, miraculously appeared," said M. Lee Pearce, chairman of the Tenet Shareholder Committee. "Even though virtually everyone that we talked to agreed with us in principle, few would vote against Tenet's management or nonmanagement board members with a rapidly rising stock price."
-----------------------------------
In 2000 -- the year before Sulzbach cashed in -- Tenet insiders sold around $3 worth of stock for every $1 they spent investing in the company. In 2001, they sold $100 worth of stock for every $1 they spent. And in 2002, when Barbakow executed his big sale, they cashed in $275 for every dollar they invested.According to Tenet's latest proxy, Sulzbach owns fewer than 13,000 Tenet shares -- a fraction of the number she sold in 2001 -- although she still has the option of purchasing 312,500 more.
Top Lawyer Bailed Before Tenet Tanked The Street.Com (Melissa Davis) August 14, 2003
(Added 2007) As with other corporate collapses there were large sales of shares shortly before the collapse which may have been coincidental. It was sufficiently worrying for the US Securities and Exchange Commission to commence an informal investigation and monitor the situation. Their findings prompted them to turn this into a formal investigation of Tenet's business practices.
(Added 2007) No recounting of Tenet's sordid corporate history should fail to note those who have profited most handsomely at Tenet. In 2002, Mr. Barbakow realized over $115 million from stock option exercises, Thomas Mackey (former-chief operating officer) realized over $14 million, and in 2001, Ms. Sulzbach realized $7.25 million from her stock options. Both Mr. Barbakow and Mr. Mackey exercised their options at prices very close to Tenet's all-time high stock value. Unfortunately for Tenet stockholders, in November 2002, Tenet's stock price plummeted on news of the outlier payment scandal and Tenet lost more than $17 billion in market value. Mr. Mackey, who allegedly orchestrated the outlier pricing strategy, is all the richer for Tenet's machinations, while Tenet stockholders are all the
Letter from Senator Grassley to Trevor Fetter, Acting Chief Executive Officer and President of Tenet Healthcare September 5, 2003
A Tenet spokesman said Mr. Barbakow's transaction was the first time he had ever exercised options at the company, and the options were due to expire next year. He said Mr. Mackey's sale was not related to his departure. Inquiries Raise Questions About Tenet's Strategy New York Times November 11, 2002
Tenet Healthcare (THC), already under federal scrutiny for Medicare payments, notified shareholders Monday that the Securities and Exchange Commission has opened an informal file on the hospital operator. Tenet Healthcare under informal SEC probe USA TODAY November 18, 2002
- - - begun an informal inquiry into the company, including examining the unusually high volume of Tenet stock trades in the last few weeks
- - - Barbakow, said company officials met with regional SEC representatives last week. Tenet officials said the two-hour-long meeting included questions about Tenet's Medicare payments and about sales of Tenet shares by company insiders.
---------------------------
In the last couple of months some Tenet directors and senior management exercised stock options. On Oct. 4, for example, Thomas B. Mackey, Tenet's chief operating officer, exercised options on 277,500 shares at $51.50, grossing about $10 million. Tenet Says SEC Has Launched Informal Probe LA Times November 19, 2002
Officials from California-based Tenet Healthcare, the nation's second-largest for-profit hospital chain, on July 9 announced that the Securities and Exchange Commission has launched a formal investigation into the company's business practices, the New York Times reports (Pollack, New York Times, 7/10). The SEC on July 8 issued a subpoena to Tenet that seeks documents that date back to May 31, 1997, on stop-loss payments, increases in "gross charges" and Medicare outlier payments (Wall Street Journal, 7/9). The SEC will investigate whether Tenet executives misled investors by"not informing them well enough that the company's growth was closely tied" to outlier payments, the Times reports (New York Times, 7/10)
--------------------------
Ransom (analyst) added that Tenet also may face a large SEC fine. Securities and Exchange Commission Launches Formal Investigation Into Business Practices of Tenet Healthcare ?? source which quotes New York Times, July 10, 2003 and Wall Street Journal July 9, 2003
(Added 2007) When Tenet spun off Broadline in 2000 Tenet staff once again got their fingers into the pie and ensured that they would get a disproportionate slice.
(Added 2007) Still, Tenet executives have a vested interest in seeing that now-profitable Broadlane ultimately succeeds. Just weeks after pouring seed money into Broadlane, Tenet turned around and offered company employees a piece of the pie. Tenet executives -- including Barbakow, Dennis, Fetter, Mackey and Sulzbach -- gobbled up thousands of cheap shares in anticipation of an initial public offering. While Broadlane remains private, with continued plans to go public, Tenet pegged the value of Broadlane shares at $5.71 -- or nearly four times what its executives paid -- just six months after the company was hatched.Since then, Broadlane has leaned heavily on Tenet for both financing and business. But the company, which recently lured outside funding and made Tenet a minority holder, is moving closer to an IPO that could reap hundreds of millions of dollars for Tenet executives.
Institutional Shareholder Services, which supported Pearce's dissident group in a proxy fight three years ago, blasted the arrangement.
"ISS (Institutional Shareholder Services) takes a dim view of the participation of Tenet officers in the stock sale," ISS wrote. "This transaction galvanizes our conviction that the Tenet board could benefit from directors who may be more critical of such actions."
Tenet's Mr. Outside Has Inside Game Too The Street.Com (Melissa Davis) September 2, 2003
(Added 2007) Look what happened when Barbakow became a victim in the Worldcom scam.
(Added 2007) But his timing with 1.5 million shares of WorldCom Inc. turned out to be less fortuitous (than his timing in selling Tenet shares).In a lawsuit, Barbakow says he lost "tens of millions of dollars" by holding on to his shares in the telecom giant as it sped toward bankruptcy in 2002.
The suit, filed in Los Angeles County Superior Court last week, asserts that Barbakow and his wife, Margo, would have sold their WorldCom shares before the firm's collapse if they hadn't been duped into believing that it was a "vibrant, financially secure company."
Barbakow's bid to recoup his WorldCom losses is "the ultimate irony," said Paul Brickman of Tenet Shareholder Committee, an investor group.
---------------------------------
"As Mr. Barbakow cries over what happened at WorldCom and what WorldCom did to its shareholders, he should look in the mirror and think about what he did to Tenet shareholders," Brickman said.The Barbakows name as defendants Citigroup Global Markets, which was one of WorldCom's investment bankers; Jack Grubman, a former telecom industry analyst at Citigroup; and Arthur Andersen, WorldCom's former accounting firm.
The suit alleges that the defendants abetted WorldCom in "massive financial and accounting frauds" by helping it manipulate its financial statements.
Ex-Tenet CEO Says He Too Is a Victim LA TIMES June 29, 2004
There has been considerable public concern
about the political donations and influence of aged care chains. Most
of this has been to republicans whose policies support the corporate
chains. Columbia/HCA and the new HCA have had legendary state and
federal political influence because so many of CEO, Thomas Frist's
family have been or are republican senators.
Tenet has probably channeled most of its political funding through
the Federation of American Health Systems, a powerful corporate lobby
group where Tenet is well represented. There are few public reports
of political donations by Tenet.
Corporations and politicians like to keep their close relationships
and interdependency (favour for favour) out of the public eye.
Republicans have received the largest slice of corporate health care
donations and been strongly supportive to this market. Tenet's
political affiliations are revealed by revelations in documents
tabled in court as evidence in another matter. Barbakow is one of the
"Bush pioneers". These are people who have raised more than US $100
million for Bush's campaign. This seems to be a way to buy cushy
jobs. Bush has appointed the largest pioneer donators to
ambassadorial positions. We may yet see ambassador Barbakow taking up
his ambassadorial post in Canberra now that he has been forced out of
Tenet.
We should never forget that Bush appointed Thomas Scully as head of the Department of the Department of Health and Human Services and charged him with drafting new regulations. He had previously led the Federation of Health Care Systems. This was the lobby group for the for profit hospital industry. HCA and Tenet were its two dominant members occupying most of the positions on its board and committees.
The documents, which surfaced in the courtroom fight over the new campaign finance law, offer new details about Mr. Bush's most active fund-raisers - including his top three, who were awarded plum jobs as ambassadors.
They also show that more than 500 people signed up to be "Pioneers" by promising to raise at least $100,000 for Mr. Bush from individual donors. Previously, the Bush campaign had said that about 230 people had become Pioneers by raising US $100,000.
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An analysis of the documents shows that the 21 most
successful Pioneers raised at least $6.6 million. At least
$24.9 million was collected by the Pioneers.
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The list of people signed up to be Pioneers includes Ben
Crenshaw, the professional golfer; Tom Craddick, the
speaker of the Texas House; Jeffrey Barbakow, the chief
executive of Tenet Healthcare; Archie W. Dunham, chairman
of ConocoPhillips, a major oil company; and Lonnie Pilgrim,
a chicken magnate in East Texas. Campaign Documents Show Depth of Bush Fund-Raising The New York Times May 5, 2003
(Added 2007) Another 2003 report shows Tenet funneling political funds in ways in which the contributions are not disclosed. This is one where the contributors would rather not put up their hands.
(Added 2007) Aug 2003 Donors shielded
A group funneling insurance company and hospital money to the campaign for a constitutional amendment capping damages on medical malpractice lawsuits has organized so it doesn't have to disclose how much its contributors are giving to the cause.Texas Alliance for Patient Access, a nonprofit public advocacy group, has donated $500,000 to Yes on 12, a political action committee promoting Proposition 12 on the Sept. 13 ballot.
The group has voluntarily listed its members on its Web site but not how much each has contributed, - - - .
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The group's members, who pay dues ranging from $10,000 to $25,000, include Aetna, Blue Cross/Blue Shield of Texas, Pfizer, Tenet Healthcare System, HCA, Christus Healthcare and Kelsey-Seybold Clinic. Some of the members also have made direct donations to Yes on 12, which are reported.
Group backing malpractice caps shields donors Houston Chronicle Aug. 21, 2003
(Added 2007) Tenet Healthcare has been closely associated with a large number of politicians and has employed many senior people close to politicians and government. Tenet's strongest critics "The Tenet Shareholders Committee" have detailed this association and some of the possible consequences.
Presidential candidate Robert Kerrey has been in Tenet's board for several years.
J. Robert Kerrey, President of New School University in New York City, joined Tenet Healthcare Corporation's Board in March 2001. Prior to becoming President of New School University, Mr. Kerrey served as U.S. Senator from Nebraska from 1989 to 2000.
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Prior to his election to the U.S. Senate, Kerrey, a Vietnam veteran, was Governor of Nebraska from 1982 to 1987. Before entering public service, he founded and operated a chain of highly successful restaurants and health clubs.
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Kerrey received his degree in pharmacy from the University of Nebraska at Lincoln in 1966.
J. Robert Kerrey : President, New School University : Former United States Senator Tenet web site http://www.tenethealth.com/TenetHealth/OurCompany/J.+Robert+Kerrey.htm June 2006
Jeb Bush, brother of president George Bush was governor of Florida during the period when Tenet received favourable treatment in regard to its fraud settlements, fines by oversight authorities and in accreditation decisions. Immediately after Bush resigned be joined Tenet's board. That just might be coincidence of course!. Previous presidential candidate Robert Kerrey had done very well out of his association with Tenet. One can only speculate whether these lucrative jobs are rewards for any other services rendered.
Analysts enthusiastically welcomed this appointment on the basis that it indicated that Tenet's problems were over and it would soon be back to business as usual. Even The Tenet Shareholder Committee welcomed the appointment. It is worth remembering that the Committees founder Dr Lee Pearce was from Florida. His previous companies had operated hospitals there.
Attorney Carol Lam is an expert on medical fraud. She participated personally in the criminal prosecution of Tenet's Alvarado Medical Center and the CEO of that hospital on charges of illegal kickbacks to doctors.. Two mistrials were declared before the case was settled.
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Over the last 13 years, U.S. attorneys, FBI agents, other Justice Department officials, and HHS inspector generals have had a great deal of experience investigating Tenet. It would be worthwhile to ask them, in a congressional hearing, what impediments they faced in bringing action against the individuals who both profited from and had the ultimate responsibility for these scandals. If the laws are inadequate, deficiencies should be identified and corrected. This is a complicated area that goes beyond mere corporate financial fraud. If ourIf Justice Department or other government agencies failed to act or softened penalties due to political pressure, that should be exposed. One of the eight fired U.S. Attorney's was Carol Lam, who had filed criminal charges against a Tenet hospital and Tenet hospital CEO
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Tenet has employed an army of former government officials and well connected lobbyists. Among many others, that list included:
- E. Peter Urbanowicz, the company's general counsel and former HHS deputy counsel in the Bush Administration.
- Ed Gillespie, a lobbyist and former chairman of the Republican National Committee.
- Cathy Abernathy, a lobbyist and former chief of staff to Congressman Bill Thomas (R-CA) who was the chairman of the House Ways and Means Committee until this year.
- Amy Jensen Cunniffe, a lobbyist and former Special Assistant for Legislative Affairs for President Bush.
- Elizabeth Hogan, a lobbyist and former Special Assistant at the Department of Commerce in the Bush Administration; former assistant in the Bush White House Office of Presidential Personnel; former employee at the Republican National Committee.
- David Hoppe, lobbyist and former chief of staff to then Senate Majority Leader Trent Lott (R-MS)
- Jack Quinn, lobbyist and former White House counsel to then President Bill Clinton.
- One of the longest serving Tenet Board members is former U.S. Senator Bob Kerrey (D-NE). While in the Senate, Kerrey was a member of the Senate Committee (Finance) with jurisdiction over federal health programs including Medicare and Medicaid. Kerrey collected more than $850,000 by cashing in Tenet stock options weeks before the scandals erupted and the stock price collapsed
- Tenet has just announced the appointment of a new member of the Board of Directors - former Florida Governor Jeb Bush.
How Many More Lives and Billions of Dollars Will Be Lost Before the Federal Government Learns Lessons From the Tenet Healthcare Corp. Scandals? Tenet ShareHolder Committee April 24, 2007
CLICK ON LINK TO GO TO WEB SITE AND READ THE FULL CRITICISM OF THE TENET SETTLEMENTS http://www.tenetshareholdercommittee.org/
Bush helped restructure the healthcare system in Florida, a tough but important market for Tenet. His appointment to the hospital chain's board, set to begin next month, impressed Tenet's critics and supporters alike."What a great move," declared Jeff Villwock, a former analyst for the Tenet Shareholder Committee, a group long critical of company management. "Tenet has a lot of troubles in Florida. ... [Bush] must be feeling fairly comfortable about something" to join the company's board.
Just two years ago, Bush's successor -- current Florida Governor Charlie Crist -- was suing Tenet for alleged violations of racketeering laws. Tenet ultimately settled that lawsuit, which originally sparked great alarm, for a nominal sum.
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Sheryl Skolnick, senior vice president of CRT Capital Group, notes that Tenet has struggled hard in Florida, the company's second-largest market, and could use some expert guidance there. Thus, she feels "very pleased" that Tenet has managed to attract someone of Bush's caliber into the company's boardroom.Indeed, Skolnick goes so far as to suggest that Bush's willingness to serve Tenet -- long shunned because of its tainted reputation -- "sort of puts a lock and seal on the past in terms of scandals and investigations and the like" at the company.
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Of course, Bush can expect something in return for his service. Tenet's other political board member, former Nebraska Senator Bob Kerrey, sure profited before the company spiraled downward. Back in 2002, Kerrey netted some $850,000 by cashing in Tenet stock options just weeks ahead of the company's downfall.
Tenet Taps Jeb Bush The Street.com April 12, 2007
Tenet is the subject of a barrage of court actions.
These large numbers of lawsuits against doctors and Tenet, perhaps many hundreds of patients claiming that they have been subjected to unnecessary and risky cardiac procedures. Some of the litigants are relatives of patients who died. One of the actions is a Qui Tam suit lodged by the medical ethicist who blew the whistle on what was happening. These treatment related actions are addressed on the Redding hospital and on the care web pages.
A range of class actions on behalf of shareholders, including Tenet employees who participated in employee stock purchase plans. The story of these actions was here but has now been moved to part of the fraud page.
Another set of lawsuits relating to price gouging, lodged by uninsured patients, seniors and citizens concerned at Tenet's breech of its undertakings. Tenet capitulated and settled the actions by the uninsured. These are dealt with on price gouging page
Actions have been taken, investigations mounted and settlements reached with a large number of government, commercial and other bodies. Information about these is scattered across the Tenet web pages. An attempt has been made to list those actions where large settlements were reached at the bottom of the fraud page. The sum amounts to about US $2 billion.
Web Page
History
This page first created July 2003 by
Michael
Wynne
Updated July 2007
