Megan
Woolhouse
Reynold Jennings faces
tough challenges as the new chief operating officer of Santa Barbara-based Tenet
Healthcare Corp.
Jennings will try to
turn around a company with falling revenue, pending lawsuits and a myriad of
government investigations into its clinical and financial practices.
Yet Jennings takes it
all in stride.
"I can only manage
the ... hospitals that I run," he said in an interview from Dallas.
"I won't worry about things I can't control."
Jennings comes to the
job amid a massive restructuring effort at Tenet. In January, the company announced
plans to sell 27 of its hospitals in order to bolster its struggling financial
performance. It put another 14 hospitals up for sale in 2003.
Jennings will oversee
the operations of the chain's 69 remaining hospitals, amid increasing speculation
about Tenet's future viability.
Health-care industry
analyst Jeff Villwock, who has studied Tenet extensively, said he is skeptical
that Jennings or anyone else can help the ailing hospital chain. Tenet officials
have already projected that selling the hospitals will lead to $1.4 billion
in net losses for 2003 and 2004.
"I don't envy him,"
Villwock said.
Jennings, who officially
took the job Feb. 9, has served as Tenet's Eastern division president. Born
and raised in Dalton, Ga., Jennings returned there after graduating from the
The University of Georgia to work as a pharmacist at Hamilton Medical Center.
He quickly rose through the ranks and within five years was the hospital's chief
operating officer.
Jennings got his MBA
at the University of North Carolina, and took stints as CEO of various acute-care
hospitals in Georgia and Florida before coming to Tenet in 1997.
Jennings said that restoring
the trust of doctors who bring their patients to Tenet hospitals will be one
of his priorities.
He said he's energized
by the idea.
"It's just a natural
skill I've always had," he said. "[It's] very important to always
be listening and talking. ... For whatever reasons, these lines of communication
have broken down."
Prior administrators
were "arrogant" and shunned input from doctors and others about hospital
operations, he said. Since November 2002, Tenet has appointed a new chief executive,
chief financial officer and chief operating officer, and restructured its board.
One of Jennings' top
priorities is to remove middle managers who clog communication between hospitals
and Tenet's corporate leadership. Jennings wants them to report directly to
him or Tenet's chief executive, Trevor Fetter, instead of three or four layers
of management.
Jennings said he will
also work to speed up the seemingly never-ending contract negotiations with
managed-care insurers. Doing so would give Tenet "a degree of predictability
of what our revenues will be," he said. Additionally, he plans to make
the remaining hospitals more innovative by shaping them into the hospitals they
hope to sell.
Jennings also said he
hoped to expand and improve Tenet's five hospitals in Georgia, which he described
as the company's core facilities.
But he must reckon with
issues that are national in scope if he is to get the company back on track,
some experts say. Villwock, a founding member of Caymus Partners LLC in Atlanta,
said Tenet has $4 billion in debt and liabilities.
The company was also
the subject of a "60 Minutes" story that looked at sweeping problems
at Tenet, from federal action in Florida for patient endangerment to alleged
illegal kickbacks to physicians in California. The report also questioned the
company's knowledge surrounding the actions of two cardiologists allegedly performing
unnecessary heart surgeries and under investigation by the FBI.
Tenet's cash flow is
about a quarter of what it was two years ago, and the company is losing about
$10 million a week, said Villwock, who has researched the company for the Tenet
Shareholder Committee, a group of highly critical shareholders. He has made
recommendations against buying Tenet stock.
"Sometimes companies
get to the point of no return, where no matter how good they are, you just can't
get there from here," Villwock said.
Chris Press, an Atlanta
hospital consultant, said it's premature to predict Tenet's demise. The chain
may have to rebrand itself to distance itself from negative publicity. But he
cited HCA Inc. in Nashville, Tenn., as an example of a hospital system that
successfully turned itself around.
"It seems difficult
to cite a lot of examples of proprietary hospital systems that haven't had to
redefine themselves," he said. "[Tenet] has to win their reputation
and credibility back ... It remains to be seen what that would require."
Tom Thornhill, a health-care
investment banker at Millburn Capital Group, said he knows Jennings personally
and has no doubt he will succeed.
Jennings has decades
of hands-on hospital operations experience, unlike his predecessors, who had
backgrounds in investment banking, Thornhill said. Jennings successfully has
cut Tenet's costs in the past by limiting the amount of charity care offered
by hospitals, he said.
"He is an A player,"
Thornhill said. "He's a solid manager. He's industry-savvy and he understands
what makes a hospital good."
Jennings said he will
move from Kennesaw to Dallas, home of Tenet's operations division headquarters.
But he said he plans to spend more than half his time on the road visiting hospitals.
He expects it will take 12 to 18 months to bring the company back to solid financial
footing. And then one day he'll return to Georgia to retire.
"We know what we
need to do," Jennings said. "And we'll give it our best shot."