Tenet Healthcare Profit Up 23% in 3rd Quarter

SANTA BARBARA — Tenet Healthcare Corp., the second-biggest U.S. hospital chain, said its fiscal third-quarter profit rose 23% on lower labor costs and rising patient admissions.

Profit from operations rose to $152 million, or 48 cents, in the quarter ended Feb. 29, up from $124 million, or 40 cents, a year earlier. Revenue rose slightly to $2.85 billion from $2.82 billion.

Analysts were expecting earnings of 47 cents on average, according to First Call/Thomson Financial.

Tenet kept salary costs in line by hiring other companies to conduct its dietary and housekeeping operations. That helped the company increase profit after struggling with funding cuts in Medicare, the federal insurance plan for the elderly.

Admissions rose 3.6% at hospitals Tenet owned more than a year.

“This was the best growth and margins for any quarter in four years,” said Chairman and Chief Executive Jeffrey Barbakow.

The Santa Barbara-based company also said it’s receiving increases of 3% to 6% from managed-care health insurers.

“They’re getting positive surprises from private insurers, and they’re benefiting from the gradual turnaround” of eight hospitals Tenet purchased from the bankrupt Allegheny Health Education and Research Foundation in 1998, said Albert J. Rice, an analyst at Merrill Lynch with a “buy” rating on Tenet. “They’re also getting very good productivity gains.”

Tenet shares closed unchanged at $23 on the New York Stock Exchange. They have risen 29% in the last 12 months.