Health Net Restores Ties with Tenet - Analyst Blog
January 24 2013 - 12:12PM
Zacks
Yesterday, Health Net Inc. (HNT) announced that
its subsidiaries have inked new two-year agreements with
Tenet Healthcare Corp. (THC). The agreements allow
Health Net’s members to utilize the medical care facilities offered
by 11 hospitals of the latter in California.
Consequently, the members of Health Net have regained access to
the 6 hospitals of Tenet Healthcare in Southern California, which
were removed from the health maintenance organization’s network in
Dec 2012. The company had agreements with Desert Regional Medical
Center, Fountain Valley Hospital and Medical Center, John F.
Kennedy Memorial Hospital, Lakewood Regional Medical Center, Los
Alamitos Medical Center and Placentia Linda Hospital. These
hospitals have been re-added to Health Net’s network
retrospectively, thereby eliminating the impact of the agreement
termination.
Health Net’s subsidiaries had terminated the 3-year contracts
with these 6 hospitals of Tenet Healthcare, in effect from Dec 21,
2012, due to the inability of the companies to reach an agreement
regarding the terms for extension. Health Net was in favor of
changing the reimbursement rates offered by Tenet Healthcare
considering the market conditions in California.
The company wanted to bring the reimbursement rate at par with
the medical consumer price index, which exceeded the 3% mark at
that time. Additionally, Health Net wanted the reimbursement rate
for those programs, which are financed by the state or the federal
government, to be based on the funding of these programs.
However, these terms were not acceptable to Tenet Healthcare.
Consequently, the two companies failed to reach an agreement and
Health Net decided to use its contractual option to terminate the
agreements, which were already on the verge of expiration, with all
6 Tenet Healthcare hospitals.
The agreement will help Health Net offer good quality health
care with affordable benefits to its members. The other 5 hospitals
included in the agreement are Doctors Hospital of Manteca, Doctors
Medical Center of Modesto, San Ramon Regional Medical Center,
Sierra Vista Regional Medical Center in San Luis Obispo, and Twin
Cities Community Hospital in Templeton.
Both Health Net and Tenet Healthcare currently carry a Zacks
Rank #3 (Hold). Other stocks in the medical sector that are
currently performing well include Acadia Healthcare
Company, Inc. (ACHC) – Zacks Rank #1 (Strong Buy) and
American Caresource Holdings, Inc. (ANCI) – Zacks
Rank #2 (Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis Report
AMER CARESOURCE (ANCI): Free Stock Analysis Report
HEALTH NET INC (HNT): Free Stock Analysis Report
TENET HEALTH (THC): Free Stock Analysis Report
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