Capital Markets

Tenet CFO Farber Resigns

A federal attorney general's office has also subpoenaed documents of physician relationships and financial arrangements at the hospital operator.
Stephen TaubAugust 4, 2004

Tenet Healthcare Corp. CFO Stephen Farber announced his resignation on Tuesday, the same day that the hospital operator also reported a new government probe and a wider quarterly loss. Tenet is already facing a number of criminal and civil investigations.

Farber, who left a Wall Street job to join the company in 1999, said he is leaving Tenet and returning to Wall Street after considering the pending move of its corporate headquarters from Santa Barbara, Calif. to Dallas next year and “good progress on many fronts,” according to a company statement.

“As this company continues to stabilize, the CFO’s focus at Tenet will be more on day-to-day operations and less on transactions and restructuring, on which I thrive,” Farber said in the statement.

Tenet also said Tuesday in a filing with the Securities and Exchange Commission that on July 30 it received a subpoena from the United States Attorney’s Office in New Orleans, requesting documents relating to physician relationships and financial arrangements at three New Orleans area hospitals — Memorial Medical Center, Kenner Regional Medical Center, and St. Charles General Hospital. The company stated that it is cooperating with the government.

Farber was promoted to finance chief in November 2002. The promotion came one day after David Dennis had resigned from that spot just one day after the company reported receiving an audit request from the Kansas City, Mo., office of the U.S. Department of Health and Human Services to determine whether certain types of payments to Tenet hospitals were made in accordance with Medicare laws and regulations.

Earlier that week, Tenet had acknowledged that the Federal Trade Commission had asked for more information about the merger of two of its hospitals in Missouri. Tenet also said at the time that a hospital in Palm Beach, Florida, was in danger of losing its Medicare status.

During Farber’s tenure as chief financial officer, Tenet successfully renegotiated its credit agreements and substantially restructured and extended the maturities on its long-term debt, thus significantly improving its corporate liquidity, the company said. In the past 18 months, the company also successfully launched plans to divest more than 40 hospitals and focus its efforts on a core group of 69 strong hospitals.

Last year, Reuters reported, federal prosecutors indicted Alvarado Hospital Medical Center, the San Diego-area hospital’s chief executive, and the hospital’s director of business development on charges of violating anti-kickback laws in recruiting doctors. All have pleaded not guilty.

Also on Tuesday, Tenet announced that its quarterly loss more than doubled, largely because of unpaid patient bills and special charges.