Tenet's Prognosis: Lots of Complications

In addition to contending with federal probers, the closing of a Medicaid billing loophole could crimp the hospital operator's profits

Tenet Healthcare, the nation's No. 2 hospital operator, is facing a conundrum. CEO Jeffrey Barbakow has admitted that Tenet (THC ) earned 20% of its profit growth last year by employing a Medicare billing loophole that will soon be closed. Without that strategy, Tenet could get saddled with more of the financial liability for taking care of the sickest patients. Yet it continues to pursue an aggressive growth plan of targeting aging baby boomers who demand the best in cardiac care, orthopedic surgery, and other risky procedures.

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