The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes.

Every attempt is made to provide accurate and well written material. Your contributions, suggestions, additional information and advice sent to the web address at the foot of the page are welcome. Where possible they will be included in revised pages.

The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Material contained here represents my views based on my study of the operation of the health care marketplace and the material available to me. It should not be assumed to represent the views of any other individual or organization.

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Tenet Healthcare & National Medical Enterprises (NME)

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This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then
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Content of this page
This page provides an overview of, and access to web pages describing the scandals involving National Medical Enterprises (NME) in the 1990s and again in 2002 under its new name Tenet Healthcare.


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Hitting financial targets, a current Tenet executive said, was "how you were judged, paid and evaluated." LA Times December 12, 2002

"Tenet has honed everything down to the fine art of making money," said Ralph Bard, a Tennessee surgeon who lost privileges at a Tenet hospital where he fretted about patient care. "Tenet will do anything -- anything -- to make a profit."
Hearts Harden as Tenet Faces the Senate The (Melissa Davis) September 7, 2003

March 2006 Corporate Culture
"I think at the end of the day, if you look at over the past 15 to 20 years of the company, you'd have to say the management has been pushing the bottom line, telling doctors to cut corners, basically saying we are going to evaluate you and promote you based on how well you make money, not on how well you take care of the patients

"The evidence suggests that the corporate culture is so pervasive that they may well be incapable until there is a total housecleaning of those in management that are a part that corporate culture," Cripe (Author of a book about Tenet/NME) said.
New Orleans hospital operator has checkered past CNN March 9, 2006

Jan 2007 Book Review
Jan 2007 Stephen Klaidman's comments on his book "Coronary" My interest was in systemic flaws in American medicine, not criminal fraud. But the more I thought about it the more obvious it seemed to me that vulnerability to fraud was a major systemic flaw in American medicine.
The book has received high marks, and a Business Week review says, "Klaidman never forgets that, at its core, this is a tale of a company that seems to have cracked under pressure from Wall Street to continually boost profits."

Americans are at the mercy, ultimately, of a giant medical machine. Parts have our best interests at heart. Other parts will grind our bones to make their bread.
Coronary‚ cuts to heart of Tenet scandal Redding Record (Kelly Brewer) January 21, 2007

Tenet Healthcare has had two comings

In its first incarnation during the 1980s and 1990s the company was called National Medical Enterprises (NME). It was involved in a massive scandal defrauding Medicare by buying patients for up to US $2000 each from anyone who could persuade them to come to hospital. The company had contracts with bounty hunters and even pleaded guilty to kidnapping a patients. It bought patients from Canada.

Vast numbers, many of them children did not need hospital admission. The company lied to them and kept them in hospital for the full duration of their insurance all the time providing them with vast amounts of unneeded treatment. All of this was signed for by doctors. The company eventually pleaded guilty to criminal practices in 1994, was forced to sell its specialty hospitals where the fraud occurred, entered into a variety of integrity and compliance agreements and paid in the region of US $1 billion in settlements and compensation to patients.

National Medical now borrowed money and expanded rapidly by a series of takeovers and renamed itself Tenet Healthcare. It claimed to be a kinder and more ethical corporation and many believed them. Its policies were directed to securing regional dominance by buying up not for profit hospitals.

NME entered Australia in 1991. I was already aware of its business practices in its international operations and had been assisted by the Australian Medical Association, the Federal Government and International Airlines in having some matters addressed. I did not however have proof of most of its practices and was unable to block its entry to Australia. During the subsequent years I collected information and was involved in the steps which eventually led to NME, now renamed Tenet Healthcare leaving Australia in 1995.

Tenet's second incarnation occurred after the stringent controls lapsed in 1999. It immediately resumed its former business policies and practices. It used its market dominance to rapidly increase its prices while at the same time targeting sicker patients and complex procedures. This allowed it to circumvent the restrictions on profits imposed by Diagnosis Related Groups (DRG's) funding.

The second scandal broke in October 2002. It is clear that the many allegations had substance and that Tenet's underlying business practices were unchanged from the earlier scandal. It was alleged that it once again gamed Medicare to generate vast profits, and that large numbers of patients were subjected to profitable invasive cardiac procedures and surgery when there was no need for this. There were a host of other allegations and a large number of government agencies investigated.

Tenet fought bitterly to avoid another criminal conviction. It settled multiple actions from government, community and private entities reaching a final global settlement of US $900 million in 2006. It also accepted a stringent Corporate Integrity Agreement CIA. Although it paid about US $2 billion in relation to all these matters it did not admit guilt in any of them. It insisted that even though some of its practices had been inappropriate they were not illegal.

Insights: There is a vast amount of information available about both of these incarnations. They provide a fascinating insight into the way the corporate marketplace works and why it is so dysfunctional. I have devoted multiple pages to analysing different aspects of their conduct.

This web page:- This web page provides an overview of both of these incarnations. It also provides brief comments and links to the other pages describing and analysing NME and Tenet's alleged conduct.

Tenet's web site is


Tenet Healthcare has had two comings

Breadth of these web pages

THE FIRST COMING -- National Medical Enterprise (NME) 1969-94

Brief overview
  • The Founding Directors
  • Early Growth
  • Diversification
  • Fraud
  • Australia
  • Renewed growth
  • A New Image
  • People and Culture
  • A good example of business-think
  • Documents

Access to web pages and outline of each

  • A PERSONAL STORY (Battle with NME)
  • National Medical Enterprises : Founding Executives and Culture


  • Update Page 1998
  • Purchases by Tenet Healthcare
  • Vista Healthcare (link to web page)

THE SECOND COMING -- Tenet Healthcare 1999-2007

Brief overview
  • Tenet's early years
  • A kinder softer company
  • The Iron Fist
  • New Aggressive Policies
  • Business-think
  • Red Flags
  • Corporate Blindness
  • Collapse
  • Consequences
  • Resolving all the allegations for over US $2 billion
  • Tenet's attempt to reform
  • Tenet's financial position and its prospects
  • Relevance

Access to web pages and outline of each.

  • THE STORY Part I : Rise and Fall 1999 to 2003
  • The Story Part II : The Struggle to Survive 2003 to 2007
  • PACMAN activities
  • Fraud
  • Price Gouging
  • Series "Tenet Healthcare and its Doctors"
    • Introduction to Tenet Doctors
    • Tenet Healthcare's Redding Hospital : Unnecessary Cardiac Procedures I
    • Tenet Healthcare's Redding Hospital : Unnecessary Cardiac Procedures II
    • From Singapore to Redding : A Long Trail to Follow
    • The fallout from the Redding Scandal
    • Tenet and Kickbacks to doctors
    • Tenet, its doctors and price fixing
    • Unsafe theatres : Dangerous heart surgery in Florida
    • The saga of failed sterilizers
    • Tenet has problems with its doctors
  • Failures in Care
  • The Nursing Disputes
  • Tenet Healthcare : Accreditation and oversight page
  • Tenet Healthcare Additional Issues
  • The Rewards of Deviance (1993 objection in NSW Australia)
  • Tenet and Hurricane Katrina

Other web sites


The Tenet and National Medical Enterprises Web Pages

I have tried to write these to accommodate a variety of potential readers. There are those who want only an overview of what happened. For them I have provided the material on this page. For those who want more information I have written a series of linked pages. In these I have summarized the content of literally hundreds of reports and commented on them. For those particularly interested and for the researcher I have in the more recent pages included large numbers of sometimes lengthy extracts from the press. Those less interested can simply ignore or skim read them. These give more detail and also the actual words of those involved. They give the flavour of what happened. They also draw together a distilled reference resource.

Additionally of course Tenet is a litigious company with its back to the wall and is well known for initiating SLAPPs (Strategic Lawsuits Against Public Participation) even when there are no grounds for them. It has already done so against a medical critic in the USA. It is more difficult to do this when the material contains the words of journalists who actually made the allegations and criticisms. The material reproduced here is all copyright of the newspapers listed and is reproduced here in the public interest to stimulate discussion and debate about the future of health care. I consider this fair use.

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The Founding Directors

Richard Eamer was a young lawyer working in a health related area. He recognized the potential which the new Medicare system offered for profit. In the mid 1960's he formed a partnership with two other lawyers Cohen and Bedrosian. They bought some hospitals and formed National Medical Enterprises (NME). Eamer, an eccentric highly intelligent manic depressive was the driving force behind the company. He became chairman. John Bedrosian was the front man responsible for public relations and for dealing with shareholders. His conduct and public statements were particularly revealing of corporate thinking. I do not have much information about Cohen.

Early Growth

The company prospered. There was a hiccup in 1985 when documents suggested that the company may have offered campaign donations in return for the state government in New Mexico overturning a local council ruling preventing NME from building a hospital in New Mexico. John Bedrosian strongly denied the allegation claiming "This company does not engage in illegal and improper conduct. God help anybody that does". (Modern Healthcare 26 Apr 85 p20)


The introduction of Diagnostic Related Groups (DRG's) cut into the profits to be made from General Hospitals. The company diversified into specialty hospitals (psychiatry, substance abuse and rehabilitation) and aged care (nursing homes). It spun off its aged care company Hillhaven in the late 1980s. Eamer remained chairman. Hillhaven trained the founders of several other companies and set the ethos of this industry.

By 1991 NME owned over 150 hospitals in the USA. 35 were general hospitals and 115 were in the specialty hospitals group where there were three subgroups (Psychiatry, Substance Abuse, and Rehabilitation)

NME also commenced its international expansion. Between 1985 and 1994 Tenet/NME expanded into Singapore, Australia, Malaysia, Thailand, Indonesia, United Kingdom, Spain and Switzerland.

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In 1991 there was a massive scandal and NME was the prime offender. The company had misused patients in order to defraud Medicare on a massive scale. It had indulged in a variety of unconscionable practices. It was faced with exposure after exposure. It was subjected to multiple court actions over the next several years. It pleaded guilty to criminal conduct, was forced to sell its specialty hospitals and pay about US $1 billion in fraud related settlements. It paid at least US $132 million to settle actions taken by patients, many of them teenagers at the time they were misused.

The actions were taken by two state authorities, 19 insurance companies, former employees, former patients, multiple shareholders, the US Department of Justice and the US Securities and Exchange Commission. Tenet/NME responded by discrediting individuals who testified to its practices, by threatening its critics and by court actions against its accusers. Senator Grassley summarized Tenet/NME's conduct in a letter 9 years later after it offended again.

In the annals of corporate fraud, Tenet (formerly National Medical Enterprises (NME)) more than holds its own among the worst corporate wrongdoers. When Mr. Jeffrey Barbakow became president and chief executive of NME in 1993, NME was a scandal-plagued corporation accused of, among other allegations: maintaining a corporate policy at its psychiatric facilities of paying doctors for patient referrals; imprisoning patients for insurance payments; charging insurance companies for treatment and medication that were not provided, provided at grossly inflated prices or provided when unnecessary; and milking insurance until coverage was exhausted.

After NME settled a wide-ranging federal investigation in 1994, for a then record $379 million healthcare fraud settlement, including $33 million in criminal fines, Mr. Barbakow, who had been an outside director for NME since 1990, stated that NME's problems were worse than they seemed when he became CEO (prior to his stint as an outside director, Mr. Barbakow helped finance NME's growth for more than a decade as an investment banker for Merrill Lynch).
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003

Tenet was required to sell its specialty hospitals and was restricted to operating general hospitals. It claimed that its general hospitals were not involved. The international division was a subsidiary of its general hospital group. Tenet sold its holdings in Singapore and Australia in 1995 after the Australian government stepped in to restrict the company's operations. It also sold its holdings in Indonesia, Malaysia, Thailand and the United Kingdom.

Tenet/NME's operations in the USA were restricted by court injunctions obtained in Texas in 1991 and by the Securities and Exchange Commission in 1994. Restrictions were imposed by, and undertakings were given to, the US Department of Justice in 1994. Tenet/NME entered into an integrity agreement, undertook to maintain an ethics committee and instituted a compliance program. It was not prevented from placing members of its international division into senior positions, even though they had not confronted serious allegations of misconduct in international hospitals and the authorities had been made aware of this. The way in which Tenet adhered to its integrity agreement was also described by Senator Grassley.

Even while operating under the CIA, Tenet continued gaming federal healthcare programs. In fact, in April 2001, Tenet settled a qui tam lawsuit that alleged that one of its hospitals overcharged Medicare patients for surgical outpatient pathology services during the period Tenet operated under the CIA.

Last January, DOJ filed a $323 million lawsuit alleging that Tenet illegally submitted more than 19,300 false claims for $115 million in wrongfully upcoded Medicare bills in order to maximize revenue. According to DOJ, many of the allegations took place during the 5-year period Tenet was under a CIA with HHS-OIG. DOJ alleged that Tenet falsely certified that it was in compliance with Medicare regulations and the terms of its CIA, when in fact, Tenet knew of a significant number of fraudulent claims that had been submitted and for which Tenet had never, and still has not, made restitution to the Medicare program.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003

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Australia was one of the first international countries to become concerned about NME's conduct. While NME retained strong political and business support, it was repeatedly challenged by probity complaints to state hospital licensing authorities. They were not sympathetic to the company's position. Citizens groups exerted pressure on politicians. Tenet's local operations were subjected to continuing hostile press coverage. Its operations were restricted and it was eventually forced to sell its Australian holdings.

Other countries were well informed. Tenet/NME sold all of its international operations except for one hospital in Spain. The Malaysian group Parkway Holdings purchased much of Tenet's international empire.

Parkway Holdings, owner of Gleneagles Hospital, has agreed to buy the regional chain of Mount Elizabeth Hospital in a deal which will give the merged group a stranglehold on Singapore's private hospital market, as well as make it the most formidable player in South-east Asia's healthcare industry. Sources told BT that the publicity-listed Parkway struck a deal with US medical giant Tenet Healthcare Corp, to take over the latter's chain of hospitals in South-east Asia and Australia.
The Parkway deal is believed to include Tenet's two wholly-owned hospitals in Singapore - the 505-bed Mount Elizabeth in Orchard Rd and the 145-bed East Shore Hospital in the East Coast; 30 per cent of the Malaysian operations, which include a 150-bed hospital in Johor and a medical centre in Kuala Lumpar; 40 per cent of the Bumrungrad Medical Centre being built in Bangkok; and 51 per cent of Australia-listed Australia Medical Enterprises, which has just under 10 hospitals. Sources said Mount Elizabeth is also close to signing a joint-venture in Indonesia and this is expected to come under Parkway when the takeover is completed.

The deal will in one fall swoop make the Parkway group the largest owner and manager of hospitals in South-east Asia. It could also have serious implications for the cost of private healthcare in Singapore given that the merged entity will be the dominant player in an oligo-polistic market.
Mount Elizabeth's growth in Singapore has been so rapid that it is said to have administrative staff spilling out from offices around its Orchard Rd hospital, into the Paragon building, Tong Sia Building, Yen San Building and the Promenade.
Tenet is further hamstrung by other commitments back in the US where at the start of the year it completed a US$2 billion acquisition of American Medical International Inc.
The fate of Mount Elizabeth's expatriate staff is not known. The huge cost involved in their employment is believed to have been a thorny issue in the negotiations.
By Catherine Ong Singapore, Business Times May 23, 1995

Parkway's bid to buy in Tenet's Australian business was rejected by shareholders and the sale went to Mayne Nickless after a bidding war with Generale Sante Internationale (GSI) a French multinational.

Renewed growth

Immediately after its guilty plea in 1994 NME merged with America Medical International (AMI) and renamed itself Tenet Healthcare. It now became the second largest US hospital company.

The $3.3 billion acquisition ranks Tenet the second largest investor-owned healthcare provider in the United States with 83 acute care hospitals and numerous related businesses in 13 states and four foreign countries. "The combination of these two strong companies will create one of this country's preeminent healthcare providers," said Jeffrey C. Barbakow, chairman and chief executive officer. "Tenet has the cash flow and balance sheet necessary to be an aggressive leader in this rapidly evolving industry.
AUSTRALIAN MEDICAL ENTERPRISES: SECURITY AGREEMENT (Part A) Australian Stock Exchange Company Announcements March 6,1995

In 1997 Tenet entered into a US $1.8 billion merger with OrNda (third largest company) which gave Tenet even greater influence in the USA. An attempt to disrupt the deal by sending information to OrNda's chairman was unsuccessful. Soon after Tenet paid US $12 million to settle fraud allegations involving OrNda's past conduct. Like Columbia/HCA it expanded by buying, merging and partnering with not for profit community hospitals. The two giants steadily squeezed smaller competitors out of the business.

A New Image

People soon forgot that Tenet Healthcare was National Medical Enterprises. Its new benign image, its willingness to agree to community requirements and claims to shared values were widely accepted. This new image ensured its growth at a time when Columbia/HCA's aggressive behaviour and fraud investigation had dented its credibility. It targeted not for profit operators as it set about securing regional dominance and so securing negotiating leverage when dealing with insurers.

- - - - John T. Casey, 49, who had been AMI's president and chief operating officer, will become co-vice chairman on Tenet's board of directors. In addition, Casey will continue to provide his expertise to the company as an executive vice president, helping build alliances and other business arrangements with not-for-profit hospitals, an area the company has identified as a strong growth opportunity.

In a 1998 web page (now removed) I wrote " Whether Tenet/NME has changed its ways is debatable. Its hospitals are among those which have paid large fines for patient dumping. Three of its hospitals are once again being investigated and among the concerns is the payment of kickbacks to doctors".

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People and Culture

While Tenet/NME claimed to have changed its culture and have replaced management in 1995 this was not true. Only the three founding members in the public eye resigned or were fired. Jeffery Barbakow, the new chairman, was a close friend, admirer and adviser to chairman and CEO Richard Eamer. The remainder of senior management remained in place. The company's culture and its belief that control of the medical profession was the key to success were not changed. When its statements at the time are examined carefully this is apparent. It is clear that it is Tenet's standards and philosophies which others were expected to share. The seeds for the next scandal in 2002 were sown and a commitment to aggression pointed to the future. This quality is poorly suited to the empathic care of the weak and vulnerable.

Co-founder John Bedrosian had been the public face of the company and his public misinformation had discredited him and the company. He was fired and after a prolonged dispute won $148 million for wrongful dismissal.

A good example of business-think

The business philosophy and many of the business practices adopted by Tenet/NME were and still are widespread in the USA as well as in corporate medicine in Australia. An abundance of witnesses statements, court documents and internal company documents are available for analysis. Tenet/NME's first incarnation consequently provides a unique insight into the business mind and into the consequences of uncritically applying market principles to health care.


Many original documents and the full text of witness' statements are included in "The profits of Misery". Tenet/NME's subsidiary "Psychiatric Institutes of America" was a prime focus of the hearing.

"Profits of Misery: How Inpatient Psychiatric Treatment Bilks the System and Betrays our trust. Hearing before the Select Committee on children, youth and families, House of Representatives, One hundred second congress, second session. held in Washington DC on April 28, 1992 from US Government Printing Office, Mail stop: SSOP, Washington, DC 20402-9328, ISBN 0-16-039353-1

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WEB PAGES 1969 to 1994


National Medical Enterprises, at the time the third largest hospital chain misused vulnerable patients to perpetrate a massive fraud in the late 1980's and early 1990's. After it pleaded guilty to these crimes in 1994 it changed its name to Tenet Healthcare and marketed itself as the model of an ethical company. A vast amount of information from this company gives a remarkable insight into the aberrant thinking of health care corporations. Similar patterns of thinking can be identified across the industry.

There are several pages on this site which address various aspects of Tenet/NME's early history, its conduct and our experience of Tenet/NME in Australia. This section summarizes and links to these and related pages. This page will also give access to more detailed descriptions of various interesting facets of corporate behaviour


In 1996 I presented a paper analysing the impact of market pressures on the care of patients. I used NME as an example by analysing its conduct. I have placed a slightly expanded version of this paper on this www site. The paper tells the story of NME's conduct in the USA and of its entry into Australia.

The paper uses George Annas idea of "Metaphors" to explore the impact of the marketplace metaphor on clinical medicine. The page first describes the origins of corporatised medicine in the USA. It then looks at the role of the stock market and of corporate responsibility to the market. It examines the markets perceptions of the nature of health care by quoting from analysts' reviews praising NME and its disturbing practices. At the time I did not realize the central role played by institutional investors and lenders in all this. Tenet's second coming and the HealthSouth debacle illustrate this better.

The page goes on to analyse the way in which NME's founder, Richard Eamer and the company developed their own culture, set of market beliefs, and business policies within this market model of care employing a variety of rationalizations to give it legitimacy. Within this frame work it was legitimate to aggressively market misinformation and fan community anxiety in order to increase admissions. It was also legitimate to buy patients from doctors, priests, school councilors and contracted bounty hunters, admitting people to hospital whether this was necessary or not and then subjecting them to vast amounts of unneeded treatment. This was how soap, cosmetics and other products were sold. They did not see health care products as any different.

The culture was built around centrally decided market objectives called "plan". Intense pressures were generated in order for each hospital to meet or exceed plan using a web of large financial incentives and disincentives. Commercial arrangements bound doctors to the corporate mission. Internal documents testify to the enthusiasm with which many identified with the corporate mission and were blind to what they were actually doing. The paper describes how the bubble burst and the way the company responded by continuing to deny its culpability in the belief that they had been unfairly victimized.

The paper also describes the way the company entered Australia and how the business community and politicians were simply unable to comprehend the reality behind the credible and convincing faces of the impressive businessmen and their view of health care and its future. State regulatory authorities had the task of perusing NME's own documents and took a different view opposing the company. The message was eventually driven home and steps were taken to drive the company out of Australia in 1995.

The events and the documents provide a fascinating insight not only into the nature of the marketplace, but into the behaviour of the system, of individuals, and of politicians in Australia.

CLICK HERE -- to go to the beginning of the paper

CLICK HERE -- to go to the sections on the marketplace

CLICK HERE -- to go to the sections on NME's conduct in the USA

CLICK HERE -- to go to Australia's experience with Tenet/NME

The many children who were misused for profit claimed damages and settled for US $100 million towards the end of 1997. They described their experiences. This is described on a later page.

CLICK HERE -- to go to this description.

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My submissions relate to the conduct of Tenet's senior staff, as well as what I see as Tenet's failure to honour the spirit of the integrity agreement and the ethical undertakings by addressing the matters which I have drawn to their attention.
My submissions to Tenet's ethics committee directly and very specifically challenge Tenet's claim to hold integrity and honesty as its most important principle. From the submission

Background to this page

Tenet/NME funded their Australian CEO to mount a defamation action against me when I made information about their international operations available in Australia. The action was never prosecuted and was withdrawn when they were pressed to court. When the defamation action against me in Australia was abandoned they commenced an action against me in Singapore even though they had already sold up in both countries. This action was simply vindictive. I needed to take the battle to them in the USA and compromise their position. They had made elaborate claims to a new integrity and to the integrity of the new senior staff brought in from their international operations. They boasted of their ethics committee. They were vulnerable to evidence that these boasts were flawed.

At the time I had little doubt that these people did pose a serious threat to US citizens and the US system. This was quite apart from my personal fight back in response to their defamation action in Singapore. I tried to warn US citizens of the potential problem with Tenet by sending information to the US department of justice, key politicians, US medical associations and also to communities and universities whose hospitals were targeted by Tenet - as well as to companies like OrNda which were planning to merge with Tenet. The 2002 Tenet scandal shows how well founded my concerns were.

I possessed court documents where these international staff were accused of unethical and criminal conduct by a doctor in Singapore. I also possessed documents which seriously questioned their integrity in dealing with Australian government departments.

I made a series of submissions to Tenet/NME's ethics committee in regard to problems I perceived in the ethical integrity of the company and of the persons involved in Singapore and Australia. When these were ignored I made a summary complaint and submitted that to the ethics committee.

I made extracts of documents and of my complaint. I sent these to government departments, medical associations and to doctors in their hospitals indicating that the action in Singapore was in order to stop me from pressing these matters and from making these documents available in the USA.

I asked them to put pressure on Tenet/NME to address my complaints and to abandon the action against me. I enclosed the senate statement which told my story in a highly credible context. There was little room for another defamation action as they had failed to address the complaint when it was sent to them.

At the same time I created this www site, put the summary complaint on the www and asked visitors to the site to write to Tenet/NME's chairman urging him to ensure that the company addressed my complaint. (These pages since removed)

This contents of this page

This page contains my summarized submission to Tenet's ethics committee. It expands on and addresses some of the matters relating to integrity described in my 1996 paper (see above) in greater depth. It gives greater insight into Tenet/NME's culture, a culture which saw "singing to the choir" as legitimate when dealing with authorities and the public. It becomes much more relevant and more interesting in the light of Tenet's second coming in 2002.

This 1996 submission contrasted NME's claims to integrity and ethical behaviour with the conduct of the people who were running the company. It questioned their suitability as providers of health care. The page quotes much more extensively from Tenet's many claims to integrity in 1994/5/6. It summarizes NME's US conduct and what happened to it looking more closely at the involvement of directors and staff in these events. It gives far more detail about what was happening in Singapore and more detail of the court action alleging money paid for patient admissions. It quotes from the Ng court documents.

The submission goes on to examine Tenet's role in the Federation of American Health Systems, which earlier had refused to address the implications of the Ng allegations for Tenet staff who held senior positions in the federation. This is interesting in that Thomas Scully, the head of the federation later became one of the two senior Bush government Medicare administrators during the period 2002 to 2006 when Tenet was investigated for the second scandal.

The submission examines the misinformation supplied by Tenet/NME staff to Australian authorities. The authorities politely described this as displaying a "lack of frankness and candour". It describes in much greater detail what happened in Australia and quotes extensively from public statements and also letters written by the company. It asks that the implications for the integrity of these people be addressed.

CLICK HERE -- to link to the start of the final submission to Tenet's ethics committee

CLICK HERE -- for information about claims to integrity

CLICK HERE -- for information about alleged conduct in the USA

CLICK HERE -- for information about alleged international trading in patients

CLICK HERE -- for information about the Federation of American Health Systems

CLICK HERE -- for information about alleged lack of frankness and candour in Australia.

CLICK HERE -- for information about Tenet/NME's compliance requirements and its subsequent activities

CLICK HERE -- for the names of some directors

CLICK HERE -- for the duties of a doctor as set out by the World Medical association.

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I first became concerned about Tenet/NME's international operations in 1989. I played an active part in securing information and forcing the company out of Australia. Those who have experience in whistle blowing, have read Brian Martin's "Whistle Blowers Guide" or who have studied his material on this site may be interested in the personal story of my conflict with Tenet/NME and its attempts to silence me.

I have simply told the story without attempting to analyse my successes and failures or to draw lessons from them. Those who have read about whistle blowing will be able to do so. They will note the extent to which securing credibility and powerful support was critical to success. They will also note that I was not an employee and was sufficiently distant from the company to shield me from the strategies most commonly used to crush whistle blowers. Despite this attempts were made to discredit me, my employer was threatened and two unprosecuted defamation actions were commenced against me.

CLICK HERE -- for a more detailed account of my whistle blowing activities
. . . . . . . . . . . (only of real interest to whistle blowers)

CLICK HERE -- to a brief mention of some of my original concerns in 1990 (on a July 2003 Tenet page)

I have continued to circulate material. I have acted to contain corporate intrusion into healthcare and keep multinationals out of Australia. I like to think that I have made a useful contribution to this. This web site reflects these activities.

CLICK HERE -- to link to a short summary of these activities only of interest to whistle blowers



After I had been served with a second defamation action a senator made a statement in the Australian senate describing Tenet/NME's conduct, my role in their departure from Australia and their attempts to silence me by taking legal action. This was very valuable to me in opening a new front so that I could move from a defensive position and take the battle back to Tenet/NME. It restored my credibility, which Tenet had undermined.

CLICK HERE -- to link to the senate statement

What is a SLAPP?. An article by Sharon Beder describes how SLAPP court cases (Strategic Lawsuits Against Public Participation) taken by wealthy groups against ordinary citizens are seldom prosecuted. They are stressful and very costly to the victim. They have proven to be very successful in inhibiting responsible public discourse and the legitimate dissent so important for a functional society. NME spent over $62, 000 plus eventually paying my lesser expenses on their first defamation action against me in Australia - and this did not even get to the stage of lodging a complaint acceptable to the court. I do not know how much they paid in Singapore on the second action - very flattering that they thought I was worth this much to silence!

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In 1992 I made a submission objecting to a licence for NME's subsidiary to build the new St Georges hospital in Sydney. In early 1993 there was publicity about NME's conduct. The NSW Health Department indicated publicly that it would not grant the license until the situation in the USA had become clearer and it was satisfied with NME's probity. Instead the NSW government appointed Justice Yeldham, a recently retired supreme court judge to make the decision. He pressed ahead. I visited the USA and collected documents which caused NSW Health to urge that the license be rejected. Yeldham overruled a strong submission from NSW Health that the license should be rejected. After I had examined documents obtained under FOI I wrote accusing the minister for health and Mr. Yeldham of corruption.

In December 1996 Yeldham was accused of being a pedophile. He committed suicide. It was revealed that, while not shown to be a pedophile his sexual preferences had put him at risk of improper influence. I asked the ICAC to investigate his 1993 conduct to determine whether anyone had exerted improper influence.

I also asked Tenet/NME to investigate to see if any of their staff had done so. I believe that their defamation action in Singapore depended for their success on discrediting me because of my allegations about Yeldham. This sort of criticism of the judiciary would have been totally unacceptable in that country. I suspect that these events contributed to their abandoning their defamation action against me.

This page examines the conduct which put Yeldham at risk and the nexus between police and the market which might have given individuals access to information with which pressure could have been exerted on Yeldham. It looks at the circumstances of his appointment to make the decision and the subsequent facts which suggest that the decision he took was not tenable. It documents my complaint to the Independent Commission Against Corruption (ICAC) and that the ICAC refused to investigate on the grounds that I had not supplied evidence. It gives additional information about the way NME entered Australia and established itself.

CLICK HERE -- for more information about Yeldham and my complaint to the ICAC.

National Medical Enterprises
Founding Executives and Culture

This page was on my list but I did not get to it until July 2003 after the second coming. I have written pages about most of the other "different" corporate founders - the sort of people they were. I have written about their cultures and also NME's culture. This has become more relevant because Tenet shows how a successful culture persists long after the founder and originator of the belief system has gone. The 2002 scandal illustrates this point which I have made repeatedly to authorities in Australia.

NME was founded in 1969 by 3 lawyers and was a strong advocate for market medicine in the early years when this was still highly controversial and opposed by many doctors.

The page uses an excellent description in the January 8 1993 Wall Street Journal as the basis for its analysis of Richard Eamer, NME's eccentric founder. He created the business model and the business structure which made first NME and later Tenet so successful. Many corporations followed and adopted similar models of management. The patterns of thinking and the business strategies led to both of Tenet/NME's "comings" and also to the success and then downfall of several other companies. Fraud and misuse of patients for profit now pervade the entire health marketplace but NME was the first role model. Eamer and his team were among the first into the new market in the late 1960's. They played a major part in establishing the model, the meaning systems, and the culture.

The article describes NME's culture well and also describes worrying practices in the company's supposedly "clean" general hospitals at that time - a red flag of what was to come 9 years later missed by authorities at the time. I have included many extracts from this article.

CLICK HERE -- to go to this page

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UNDER SURVEILLANCE - Tenet Healthcare 1994-99
update and other older pages

NME now borrowed against its specialty hospitals which it had agreed to sell and against its international hospital empire. It bought American Medical International in 1995 and changed its name to Tenet Healthcare. It bought OrNda in 1997 and became the second largest hospital corporation behind HCA. It sold off its specialty and international operations becoming primarily a general hospital group in the USA. It dabbled with the possibility of renewed international expansion but did not pursue this path.

During this period Tenet smarted under the restrictions which it considered unfair and onerous. It resented the designation of "criminal". It struggled to remain profitable, stretched the limits of its integrity agreement and was accused of and settled a number of matters.

Its loudly advertised ethics committee failed to consider complaints about some senior staff. Government connived in this. Additional penalties were not imposed when it seemed to breach the spirit if not the words of its agreements.

During this period Tenet assiduously pursued a growth strategy (PACMAN) that targeted not for profit hospitals. It built regional dominance and negotiating leverage as it planned for the expiry of its agreements and injunctions.

Its financial position was particularly bad in 1999. A dissident shareholder attempted to oust management. The integrity agreements had expired and by 2000 a new strategy had turned the corner When the matter of ousting Tenet's leadership came to the vote in 2000 institutional shareholders did not support this.

Most of these matters are no longer of interest or are described on subsequent pages and I have removed some pages.

Update Page 1998

In 1998 I wrote a short update describing Tenet/NME's sudden expansion after its criminal settlement and purchase of AMI and OrNda Healthcare. In June 2002 I added material about the first of the fraud settlements by Tenet. The full scandal surrounding Tenet's second coming was still 4 months away.

This material has now been incorporated into new pages.

Purchases by Tenet Healthcare

This page was written in 1998. It gave more information about Tenet/NME's rapid post-fraud corporate revival, its purchase of OrNDA Healthcare, my correspondence to OrNda in an attempt to block the purchase, and the US $12 million fraud settlement made on behalf of OrNda for paying kickbacks to doctors. I describe Tenet's PACMAN (buying not for profits) activities at this time, fines for patient dumping, investigations of alleged kickbacks to doctors and its plans to reenter the international market. The page contained a list of Tenet hospitals at this time.

This page has been superceded and removed from the web site

Vista Healthcare

In about 1996/97 Michael Ford, the previous president of NME's international division resigned from Tenet/NME and moved back to Singapore. A group with directors (including Ford) drawn primarily from NME's previous international operations in Singapore and predominantly US citizens formed Vista Healthcare in Singapore. It was funded by the Chase Manhattan Bank with which Ford was associated. They operated as international health care consultants advising US corporations planning international expansion.

Soon after this Tenet/NME announced its intention to expand internationally again into Singapore and South Africa. They appointed Ford as their agent. I am aware that they were interested in buying a general practice group in Singapore but do not know whether they were successful. As far as I know Tenet did not expand internationally again - although it retained a hospital in Spain. I suspect Vista Healthcare may have advised Alpha and Sun Healthcare in 1997/8 when Sun entered Australia.

Vista expanded in Singapore, Hongkong, the Philippines, China and other countries in this region. It even bought a single hospital in Australia. In 2002 it was purchased by the UK company, BUPA.

CLICK HERE -- to link to a page about Vista Healthcare


Other pages on this site address aspects of Tenet/NME's earlier behaviour

CLICK HERE -- for information about marketing, image and credibility

CLICK HERE -- for Tenet's relationships with doctors

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Tenet Healthcare 1999-2007 


June 1993 A prophetic submission
Medicine is moving out into the community. The emphasis is moving from hospitals where some monitoring of services is possible. The shift is to preventive medicine with screening clinics for heart disease, all sorts of cancers, women's diseases etc. etc. This trend will continue and gives organizations with NME's background enormous scope. The area is ill defined and difficult to control. Advertising can be accomplished under the guise of health promotion. The opportunities to place agents in these screening services or to form financially advantageous relationships with them is endless. It is only a short step to needless investigation and treatment.
Extract from "Rewards of Deviance", Section "What will happen" Submission to Justice Yeldham and NSW objecting to the granting of a hospital licence to NME's Australian subsidiary by J Michael Wynne June 1993 (see separate page for more extracts)

May 2002 Unnecessary Heart surgery
For-profit hospital chain Tenet, formerly National Medical Enterprises (NME), is the subject of four separate federal investigations.

The Justice Department is suing the Santa Barbara-based firm for up to $500 million in damages for filing false Medicare claims between 1992 and 1998, and investigating inflated "outlier" payments the firm collected from Medicare. The FBI is investigating charges of unnecessary heart surgery at one or more Tenet hospitals. The SEC is looking into the sudden drop in the company's stock price and charges of insider trading. The Justice Department has demanded information on 19 of Tenet's 114 hospitals, including 15 in California.

Last year, Tenet agreed to pay $17 million for incorrect laboratory billing in a similar Justice Department probe. In February of this year, Tenet paid $4.15 million to settle allegations that five Florida hospitals overbilled Medicare in the mid-1990's. These fines are on top a $9.75 million settlement for Medicare fraud at a hospital in Culver City California, and another $29 million for improper billing for home health services associated with Florida's Palmetto General Hospital. Criminality in Managed Care AP Newswires May 23, 2003

Brief Overview

Tenet's early years

Following its guilty plea in 1994 National Medical Enterprises (NME) sold its specialty hospitals and then its international hospitals. It embarked on a borrowing and a spending spree merging with and taking over others to build a large general hospital empire. It set out to secure regional dominance in key areas and targeted not for profits for purchase or partnership.

While Tenet/NME claimed to have changed its culture and have replaced management in 1995 this was not true. Only the three founding members in the public eye resigned or were fired. Barbakow was a close friend, admirer and adviser to chairman and CEO Richard Eamer. The remainder of senior management remained in place. The company's culture and its belief that control of the medical profession was the key to success were not changed. When its statements at the time are examined carefully this is apparent. It is clear that it is Tenet's values, standards and philosophies which others were expected to share. The seeds for the next scandal in 2002 were sown and a commitment to aggression pointed to the future - a quality poorly suited to the empathic care of the weak and vulnerable.

A kinder softer company

At this time it was restrained by integrity, ethics and compliance processes imposed following its guilty plea. It changed its name to Tenet Healthcare marketing a softer, kinder and more community oriented face in order to merge with or buy not for profits, some of whom it subsequently closed down amid criticisms that it had only bought them to eliminate competition.

Even while operating under ethical restraint, a Corporate Integrity Agreement (CIA) and close oversight during the next five years it seems that Tenet exploited the system.

Even while operating under the CIA, Tenet continued gaming federal healthcare programs. In fact, in April 2001, Tenet settled a qui tam lawsuit that alleged that one of its hospitals overcharged Medicare patients for surgical outpatient pathology services during the period Tenet operated under the CIA.

Last January, DOJ filed a $323 million lawsuit alleging that Tenet illegally submitted more than 19,300 false claims for $115 million in wrongfully upcoded Medicare bills in order to maximize revenue. According to DOJ, many of the allegations took place during the 5-year period Tenet was under a CIA with HHS-OIG. DOJ alleged that Tenet falsely certified that it was in compliance with Medicare regulations and the terms of its CIA, when in fact, Tenet knew of a significant number of fraudulent claims that had been submitted and for which Tenet had never, and still has not, made restitution to the Medicare program.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003

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The Iron Fist

The nurses who bore the brunt of cost cutting and saw the consequences for patients were far from happy and attacked Tenet's management practices, and the consequences for their safety and for care. Community groups were far from happy about Tenet's purchase of community hospitals and the consequences. Behind its kindly face Tenets iron fist could be seen. The persistence of NME's thinking and attitudes could be identified.

Initially Tenet seemed to prosper but when the marketplace became more competitive in 1998 its fortunes waned, perhaps because the restraints inhibited its competitiveness in a marketplace where integrity was not a trait compatible with survival .

New Aggressive Policies

After 5 years in about 1999 the restrictions on Tenet expired and it set out a new more aggressive business plan. This included:-

Tenet once again offered massive incentives linked to profits. The consequences were predictable.

Today Tenet is mired in lawsuits that detail horror stories about patient deaths and complications due to unnecessary angioplasties, coronary bypasses, and heart catheterizations at Redding Medical Center (RMC). On August 6, 2003, DOJ announced a record-setting settlement with RMC, Tenet Healthcare Corporation and Tenet HealthSystems Hospitals, Inc. (hereafter collectively Tenet) over allegations of billing federal health programs for unnecessary care. According to DOJ, Tenet will pay the United States $54 million to settle False Claims Act allegations that unnecessary cardiac procedures were performed at RMC between January 1, 1997, and December 31, 2002, and then billed fraudulently to the Medicare, Medicaid and TRICARE programs.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003

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"Unless restrained and enjoined, Defendant will continue to engage in acts, practices and courses of business as set forth in this complaint or in acts, practices and courses of similar object and purpose."
The US Securities and Exchange Commission (SEC): court documents seeking injunctions to restrain NME from re-offending 1994

How right the SEC were in 1994 and how ineffective the court injunctions they obtained, the Corporate Integrity Agreement and all the other processes to ensure this did not happen again.

The business philosophy and many of the business practices adopted by Tenet/NME were and still are widespread in the USA as well as in corporate medicine in Australia. An abundance of Tenet and NME press reports, witnesses statements, court documents and internal company documents are available for analysis. Tenet/NME consequently provides a unique insight into the business mind and into the consequences of applying market principles to health care.

To succeed in this marketplace these patterns of thought and this culture are essential. Even not for profit university, church and community groups have been forced to identify with market thinking, appoint aggressively entrepreneurial managers and exploit any weaknesses they find in the system. Many of them have now been caught up in fraud investigations and have reached large fraud settlements. Admitting guilt would entail loss of Medicare billing rights and settlements seldom do so. The consequence is that companies and their staff continue to believe that what they did was acceptable and not criminal.

It is quite troubling that Tenet did not admit liability or any wrongdoing under the terms of this latest settlement with the government. Moreover, the settlement also ensures that federal prosecutors will not pursue criminal charges against Tenet or RMC.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003

Red Flags

The consequence of having more sicker patients but fewer and less trained nurses is obvious. The nurses were frequently in bitter conflict with management as standards in some hospitals fell. Tenet also indulged in other unsavoury practices like price gouging the uninsured and then pursuing them aggressively for payment.

At the same time there was increasing concern about what was happening in the community hospitals that Tenet was managing or had acquired. There were complaints about the new aggressive Tenet's failure to honour agreements the kinder Tenet had entered into during the previous few years.

Corporate Blindness

With these new policies Tenet's profits and its share prices soared. Its hospitals including its Redding hospital in California were making vast profits. They basked in the market's admiration. The company and its staff remained impervious to the wave of discontent among the uninsured, the community, the nurses, the overcharged HMO's, and doctors particularly about what was happening in Redding hospital. Market analysts were ecstatic and a series of Medicare fraud settlements reached by the company were played down.


It all came apart very suddenly when an analyst noted that, in contrast with Tenet's reports to the market, Tenet's increased profits were almost entirely due to a vastly increased rate of outlier payments on sicker patients undergoing more complex procedures compared to other hospitals. At the same time the FBI and a host of other agencies raided the Redding hospital and accused doctors and the hospital of performing hundreds of risky heart procedures which were not indicated, sometimes on normal people - simply to increase profits.

The book, about the 2002 FBI investigation into Tenet Healthcare and accusations of unnecessary heart surgeries at Redding Medical Center, was released Jan. 9. Local bookstores can hardly keep it in stock.

"Coronary" is paced like a thriller, but this long-form journalism is a factual account packed with details. It captures well the tone and history of the region, and recounts the stunning effect the scandal had on the medical community, patients and California‚s north state at large.
Coronary‚ cuts to heart of Tenet scandal Redding Record (Kelly Brewer) January 21, 2007 (Review of Stephen Klaidman's book "Coronary")

Medicare commenced an audit of outlier payments and a host of federal and state agencies started inquiries into Tenet's billing practices. The US Securities and Exchange Commission started surveillance regarding insider trading, pension funds investigated, workers compensation investigated, and the nurses intensified their battle about care, unsafe working conditions and staffing. A group of lawyers rallied the unemployed, who went to court about price gouging. Others followed. Hundreds of patients who had been operated on, and a host of disgruntled shareholders commenced court proceedings.

Another hospital was raided and its chief administrator charged with paying kickbacks to doctors. Subpoenas were served on other hospitals looking for similar behaviour A hospital in Florida was in trouble for poor infection control. Over a hundred relatives and patients who had suffered infected cardiac operations were suing the hospital. Obviously alarmed because its inspection processes had missed all this and once again failed the public, the Joint Commission for Accreditation of Health Care Organizations (JCAHCO) commenced a series of surprise inspections of Tenet hospitals.

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Tenet's shares fell 80% within 3 weeks and its senior staff were put under intense scrutiny. As in the 1990's they totally failed to grasp what had happened or the role of their policies and culture in this. Over the next 6 months the resignation of Barbakow and several members of his board were secured. Tenet has desperately tried to recreate its kinder more responsible image. It is not going to generate the funds needed to address all these issues this way. As of July 2003 these matters are ongoing.

Resolving all the allegations for over US $2 billion

While claiming to be cooperating Tenet fought a bitter battle to avoid another guilty plea. The law was complex and ill defined. Tenet had bent it to its objectives. There was little doubt about what had happened but there were difficulties in securing convictions. Authorities ran a trial criminal kickback case against one hospital and its managers. Juries were unable to reach a decision because of the complexity. After two hung juries the government gave up. A long series of government, patient, community, and shareholder actions were negotiated to reach settlements.

It must be stressed that Tenet settled all of the allegations made about it without admitting guilt. It paid in the region of US $2 billion doing this. For the purpose of analysis this review assumes that there is substance to some if not most of the allegations. There seems little doubt that there were major problems. Both Barbakow, Tenet's chairman and CEO, and his successor as CEO, Trevor fetter. have admitted as much.

Tenet entered into a stringent sounding Corporate Integrity Agreement (CIA) for 5 years but the details leave much to be desired. If we examine the way in which Tenet ignored complaints about ethics and gamed the system during the 5 years of its last CIA; if we examine the way in which government ignored these breaches and the way in which the penalties for breaches were not implemented then little seems to have changed. Tenet has maintained close political ties. Chairman Barbakow was a strong supporter and donor to the republican party.

On this occasion a number of government officials have migrated to senior management positions at Tenet. The 2004 Democratic presidential candidate has been on its board since 2001. The brother of the president of the USA has recently joined the board. The major Wall Street bankers are backing the company and lending it money. What chance that any regulatory body will challenge it?

Tenet's attempt to reform

There was strong criticism of Tenet's board and particularly the large numbers of NME hangovers. On this occasion Tenet had no choice but to restructure its board and its management. It did so bringing in people with political and market credibility. The only doctors were those with a strong corporate focus so unlikely to rock the boat. A small but solid core of experienced Tenet staff remain including the new CEO Trevor Fetter. As in the period 1991 to 1994 management made many claims to reform and to being a new ethical company. They very probably believe this. I have not seen anything which suggests that Tenet has changed its strong focus on profits and growth or the massive incentives paid to managers like the CEO Trevor Fetter. Tenet has already started buying strategically to secure regional market dominance.

Its attempts to improve the care it provides are directed to restoring its name, appeasing its doctors and so getting it back to profitability. The sick are not its primary focus. We should never forget that this is about profits for shareholders and that profits come from the money paid for care. If the company were seen to focus away from this it would lose market support and not survive. None of the staff were appointed to do that.

Image is the key to recovery and Tenet is pursuing this aggressively by marketing itself. It has not yet changed its name as it did in 1994. My bet is that this time around it will do this by finding a smaller company and then doing a reverse takeover - merging into it to take control and the name. This will create the illusion that Tenet has gone. The community will soon forget.

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Tenet's financial position and its prospects

Tenet had concentrated its efforts on specialised units that could generate outlier payments. The rest of its hospitals had fallen into disrepair and many of the doctors who worked there had departed or started taking their patients elsewhere. Once the scandal broke these sick high care patients became financial liabilities. Under scrutiny Tenet had to increase the nurses to care for them. Tenet was no longer able to entice doctors with "legal " kickbacks and with its reputation in tatters it lost more doctors and patients. It did not have the money to upgrade hospitals which were now money losing and nobody wanted them.

It was also forced to give undertakings to reduce fees for the uninsured. This brought a flood of these patients to its hospitals with a massive increase in bad debts.

Tenet struggled to service its loans and returned repeatedly to its bankers for help. It has not made a profit since 2002 and has lost over US $5 billion of shareholder money since then. To recoup the situation and stop the losses it sold off half of its hospitals, many cheaply to groups whose interest was in preserving local services and not in profits.

By every assessment this company is financially and morally destitute. It should be broken up and sold off. Patients and communities would be better without it. All the indicators are that that will not happen. The strong support by Wall Street, by big investors, and by powerful political figures indicates that this will not happen. They plan to make huge profits by investing now and then supporting and facilitating the company's recovery. While the vast majority of us would not want our money in a company like this, sound selfish financial advice would be to invest now and help it recover - but then sell in a few years before it does it all over again. You could multiply your investment several times.

Market theory suggests that the market is self correcting and that poor operators will go under. Health care and Tenet in particular illustrate why the very opposite occurs. Astute investors know that if you can use your wealth to buy a social pariah and resurrect it you can make a fortune. The community has a short memory.


It is not difficult to understand how Tenet's culture and the business practices which it spawned resulted in these unconscionable and disastrous practices and the misuse of seriously ill patients - nor to show how closely these approximate to its earlier business practices.

These market based practices had very similar consequences in Psychiatry and Substance Abuse - areas where the risk of death and major complications were fortunately not nearly as high as in acute hospitals. We will never know to what extent similar unnecessary procedures have been performed in other hospitals and other high risk complex orthopaedic or neurological procedures. The cases were all settled and the documents sealed so everything was denied and nothing proved. We will never know how many died or were maimed needlessly. If democracy is about justice being done and being seen to be done then the USA has not been a democracy for a long time

The real interest in this is in looking at the issues in more detail, how it happened, the nature of the processes and how people behaved. This is essential if we are to develop understandings that enable us to do something about it. As in the earlier scandal we have a vast amount of information published about what happened and the people involved. While Tenet is an extreme example of what happens in the health care marketplace, the reports reveal a vast amount about the market, how it thinks and how it works. Tenet is the red flag pointing to a global malaise in health and aged care provided for profit. Unfortunately this makes it a long read.

When other market listed corporations are examined it is clear that exactly the same sort of things are happening out of the glare of the media. They may not be as bizarre but they are nevertheless severely dysfunctional and threaten not only the patients and the health system but also the whole community. This conduct defines the sort of people we are and the sort of society we live in. It shows what we will tolerate and what we will allow to happen to our fellow citizens.

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WEB PAGES 1999 to 2007


Aug 2003 Renowned economist's analysis
"I sometimes just shake my head at the American system, where the financial intent is almost cleverly designed to create mischief," said Uwe Reinhardt, a Princeton University health care economist. "For administrators, it creates a conflict of interest when they're trying to deliver the numbers at the same time that doctors are saying the hospital is doing too much cardiac surgery."
How One Hospital Benefited on Questionable Operations New York Times (KURT EICHENWALD) August 12, 2003

Nov 2002 An ethical Issue
"What they're doing is whatever it takes for profit maximization," said Max Mehlman, an ethicist at Case Western Reserve University in Cleveland

"Is that unethical? That's a fundamental issue in our society because we seem to think that it isn't, and we don't require corporations to be conscious of the unseen costs of what they're doing."
Tenet's hospitals O.C.'s most expensive // Since 1996, it has raised its charges for patient care at more than triple the rate of smaller competitors. The Orange County Register November 24, 2002

Pages describing the second coming were first written in July 2003. All of the pages were reviewed in 2007 and many sections rewritten or brought up to date. Additional information now available required some pages to be split up and sections expanded. Several new pages were written.

Revised and updated July 2007

The Story Part I
Tenet Healthcare :: Scandal in General Hospitals
(The Second Coming)
Rise and Fall
(1999 to Oct 2002) .......... (Oct 2002 to Jun 2003)

This page examines the continuation of NME's culture into Tenet, its inheritability, its infectivity, and its resistance. It describes how the scandal suddenly erupted. It briefly summarizes the main aspects of the scandal. It shows that what happened was predictable and was predicted. It looks again at the years 1994 to 1999 when Tenet was restrained by conditions imposed in its settlement to identify its long term objectives. It then examines the way Tenet changed its business practices and reverted to its former behaviour after the restraining processes were lifted in 1999. It looks at Tenet's response to the scandal when it broke in October 2002 and what happened to it in the first 9 months afterwards (July 2003).

The page essentially tells the first part of the story. Other pages explore the individual areas of concern in greater detail. There is inevitably some overlap doing it this way.

CLICK HERE -- to access this page
CLICK HERE -- to go directly to a summary of the major issues in the scandal.

New page July 2007 Update August 2008

The Story Part II
Tenet Healthcare :: Scandal in General Hospitals
(The Second Coming)
The Struggle to Survive
(Jun 2003 to 2007)

 This page picks up the story in mid-2003. It examines the actions of a dissident group of shareholder who wanted real change. It summarizes the outcomes of the law suits and the strategies adopted by Tenet.

It then examines the way Tenet's so profitable policies now became a drag on its profitability and the consequences for its financial position as it made massive losses year after year. Its major problems proved to be financial rather than legal. Tenet struggled to service its large loans and it was soon in breach. It struggled to raise money from the market and from the banks by renegotiating loans. It sold off half of its hospitals and a number of other companies it operated. Its ability to cut costs further than it had were limited but it did restructure the business and management.

Tenet restructured its board and its senior staff. It dispensed with its middle management including most of its vice presidents and moved its headquarters to Dallas in Texas. It did retain a small core of loyal NME and Tenet staff. The infusion of government staff into its management, politicians to its board and the support of Wall Street is recorded.

The company made its obligatory mea culpa's and then set about marketing a new image concentrating on promoting high standards of care in its hospitals. It secured awards in a number of trade centred evaluations. The marketplace awarded its CEO and it chairman with a number of accolades.

The ambiguity between the company's sorry situation and its apparent bright prospects are discussed.

Update 2008: In September 2007 government launched an action against Tenet's wizard lawyer, Christi Sulzbach and the case looks convincing.

CLICK HERE -- to access this page

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Revised and updated July 2007

PACMAN activities
Mergers and takeovers of not for profit hospitals

Tenet's economic revival and its scandal was made possible by its strategy of securing market dominance. This enabled it to push up its prices well beyond the market. Most of the other policies and the alleged frauds followed on this and exploited its potential.

This web page examines the implementation of Tenet's policy of securing regional dominance by buying or partnering with not for profit religious and community groups. Communities were distrustful and to secure approval under new Pacman laws Tenet was forced to make commitments and enter agreements which were not in its financial interests. To secure regional dominance Tenet aggressively neutralised the Federal Trade Commission (FTC) by taking their anti-competitive rulings to court and winning.

The new impersonal face of medicine was not welcomed by local communities. The early closure of much loved local hospitals serving local communities forced citizens into Tenet's other more distant hospitals. Communities concluded that Tenet had only purchased these hospitals to eliminate competition. Tenet's failure to meet its undertakings and agreements created outrage and angry communities mobilised. The FTC seized the opportunity presented by Tenet's price rises to show that its mergers were anti-competitive. It started investigating these mergers.

The page examines what actually happened in many local communities after Tenet took over their community hospitals.

Tenet's efforts were very successful in making money but alienated whole communities who had no choice but to use its hospitals once it was dominant. Market forces failed again.

CLICK HERE -- to access this page

Revised and Updated July 2007

The outlier, stop-loss and other Scandals

This page examines the multiple Medicare fraud settlements and related actions taken against Tenet Healthcare. It examines more closely the outlier, stop-loss, workers compensation payments and the Medicare DHS payments, all of which allowed the company to circumvent the restrictions imposed by DRG payments. The more they hiked their basic prices the more they were paid under these systems. The range of other investigations complaints and issues made about the company are listed. These make the point that the fraud and outlier problems are simply one manifestation of the severely dysfunctional polices followed, and the existence of a corporate culture within the market health care system which sees these policies as legitimate and implements them. Tenet was quite open about what it was doing and analysts were full of praise. It was only when authorities looked at what was happening and took action that they became alarmed.

Tenet negotiated the court actions and many accusation authorities and others made against it. While admitting it had been inappropriately aggressive it refused to acknowledge guilt. It paid probably in excess of US $2 billion between 2002 and 2007 to settle a multitude of financial claims and accusations. These included US $500 million to settle allegations of unnecessary surgery on over 700 patients at the Redding hospital, and a US $900 million global settlement of multiple issues including paying kickbacks to doctors.

This web page explores the many investigations undertaken and the settlements reached. It lists the sums spent settling actions. It examines the Corporate Integrity Agreement Tenet signed in September 2006 and questions its utility.

It looks at what happened after 1994 to predict the likely outcome this time round.

CLICK HERE -- to access this page

Updated July 2007 (with many additional quotes)

Price Gouging

This web page describes the way Tenet raised prices for services many times what it actually cost to provide them and often more than double the prices charged by competitors. The company pursued the uninsured very aggressively for payment causing much hardship. This must have scared others away and reduced bad debts.

An activist lawyer eventually rallied the uninsured and often unemployed Latinos who were charged inflated prices by Tenet and then pursued aggressively for payment. These groups fought back eventually gouging Tenet's reputation and its credibility. Tenet was forced to pay back excessive fees and promise reduced fees and favourable payment terms

The nursing unions initiated a series of studies looking at available pricing information. They published the results and presented at several inquiries into Tenet's practices shredding the company's credibility and savaging share prices further. The extent of the price gouging and its impact on citizens is illustrated by a number of extracts from press reports.

The nurses found that Tenet targeted orthopaedic surgery, particularly spinal surgery, most of which was covered by workman's compensation which paid 50% more than competitors. These areas and workmen's compensation had been a target of Tenet's complex care strategy and its price gouging. Monitoring processes at workers compensation were absent and it was impossible to tell the extent to which fraud, outlier payments or needless surgery had occurred. The figures needed to assess this were not available. Tenet strongly denied these assertions.

Tenet's conduct is a prime example of the failure of market forces to either contain costs or to maintain quality. In fact the company thrived by compromising both. It was the community and the nurses who addressed the problem - not the market.

CLICK HERE -- to access this page

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Tenet Healthcare and its Doctors
A series of multiple web pages

The majority of aberrant practices alleged to have occurred in NME and Tenet could not have occurred without the cooperation and acquiescence of doctors. Inevitably they are involved every time corporate conduct impacts on the care given. I wrote a page about this in 2003. Since that time the volume of material has grown and I have moved several issues into separate pages. In addition there were several new matters where doctors were implicated in what happened, or were involved with the company in some other way. I have therefore grouped these pages together as a series even though the involvement of doctors was not always central.

This series of web pages set out to document Tenet's arrangements with doctors and describe the link between Tenet's policies and the services they provide. I have not previously tried to explore the nature of the forces placed on doctors in the corporate marketplace and their responses in any depth. Tenet is as always the most revealing.

I have used the
same theoretical framework I used to analyse dysfunctional health care founders and corporate culture. I try to explain the why and how of doctors who enter into "partnerships" with a company like Tenet and behave like the reports indicate they have. One would expect them to turn their backs on a company like this and walk away with their patients. They have had several opportunities to do so (twice for Tenet) but unlike their Australian colleagues they have not done so. In my view the cultural and ideological frameworks induced by corporatisation are better established in the USA and corporate practices are consequently less confronting. The concern is that in Australia we continue down the same path.

I suggest that forces in the system exert similar pressures on doctors to those exerted on management and that the system both selects for and facilitates doctors who will indulge in dysfunctional practices. The mechanisms are the same as those which select for and encourage people like Eamer (NME), Scott (Columbia/HCA), Turner(Sun Healthcare), Scrushy (HealthSouth), Lunsford (Vencor) and Elkins (IHS).

To explore the issues using Tenet in this series of pages I have

I have examined the recent allegations that Tenet hospitals paid kickbacks to doctors. The particular circumstances provide fundamental insights into basic contradictions between health care and the market system.

The press reports describing what happened in Redding illustrate what I am saying so well that I have included large numbers of them on the Redding hospital pages

Written 2003, revised and updated 2007

Introduction to Tenet Doctors

This is the original page. It examines relationships with doctors leading up to the 2002 scandal. It and serves as an introduction to the others.

The page sets the context by looking at the broad issues and other examples of failure outside Tenet. I describe my experience of a Tenet/NMEE hospital, allegations by a doctor in an international hospital, reports of relationships in general hospitals in the USA in the early 1990s. The page then summarizes the revelations about relationships with doctors revealed in the 1990's NME specialty hospital scandal. It documents the way in which Tenet targeted partnerships with doctors as a part of its reformed image in 1994. It examines the relationship with doctors which followed and led to the 2002 scandal and the serious allegations made about care.

There are brief summaries of the other pages in the series and links to them. The page finally criticises Tenet for responding to the accusation by appointing doctors it selected to senior positions. It would have been more convincing to allow an independent outside medical body to appoint senior independent physicians who would represent the doctors and their patients rather than shareholders interests.

CLICK HERE -- to access this page

Updated and moved to separate page 2007

Tenet Healthcare's Redding Hospital : Unnecessary Cardiac Procedures I
2003 Web page

This is the first of two pages describing the fascinating but disturbing events at Redding hospital where it is alleged that 769 patients received invasive cardiac procedures which they did not need. Some died and others were maimed for life. It gives a profound insight into the way the market impacts on care.

This first page is what I wrote in 2003 with some minor additions. It examines what we know about what happened, the FBI raids, the investigation, the whistle blowers, the doctors, the hospital and its administrators, Tenet Healthcare's influence, and the community's response. Some hypothesis are generated in order to try to understand what happened.

CLICK HERE -- to access this page

New page 2007

Tenet Healthcare's Redding Hospital :Unnecessary Cardiac Procedures II
2007 Web page

This page picks up the story and examines subsequent revelations leading up to the total US $500 million in settlements. The page looks at the assessments made by others in the USA. Those who have investigated then written articles or books and those who had dealings with the doctors.

The page examines the various bodies investigating and then the settlements by the hospital, first with government, then with patients and finally the contribution of the doctors' insurers. This added up to US $ 500 million. Tenet was forced to sell the hospital.

The dispute between two groups of whistle blowers both claiming rewards under Qui Tam laws is addressed.

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New page 2007

From Singapore to Redding : A Long Trail to Follow

This web page looks at the career of one administrator and the information available about his relationships with doctors. It follows his career from uncontested allegations made in Singapore, through his role in Australia, to his return to the USA with responsibility for relationships with doctors, and finally to accounts of his dealings with the doctors in Redding hospital.

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New page 2007

The fallout from the Redding Scandal

This web page explores the impact of what happened at Redding hospital on physicians across the USA and on cardiology in particular. It describes another cardiology scandal unrelated to Tenet. It documents the investigation of cardiology in other Tenet hospitals, and Tenet's response to accusations. It looks at allegations made about neurosurgery at a Tenet hospital.

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Moved to separate page and rewritten in 2007

Tenet and Kickbacks to doctors

The brief section on kickbacks to doctors in the 2003 page was moved to a separate page as investigation and prosecution of kickbacks took centre stage.

The difference between legal kickbacks and legitimate commercial arrangements is ill defined. Government were clearly very concerned about the relationships between Tenet hospitals and doctors - and their impact. They considered these to be kickbacks. The company claimed they were legitimate arrangements. A broad range of investigations was conducted across Tenet hospitals.

A test case was commenced against the Alvarado hospital and its administrators. The final global settlement with Tenet was going to depend on this. The case dragged on for years. Juries were unable to reach a decision. After two mistrials the government gave up in 2006 and reached a settlement which included the sale of the hospital. The final global settlement that followed included allegations of kickbacks but as a consequence there was no criminal conviction, no admission of guilt and a lesser payment than anticipated.

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New page 2007

Tenet, its doctors and price fixing

This page documents the prosecution of a collusive arrangement in North Carolina by the Federal Trade Commission. This involved doctors and a Tenet hospital. The arrangement was set up in 1994, the same year that Tenet/NME was negotiating its settlement and its Corporate Integrity Agreement (CIA) with government.

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New page 2007

Unsafe theatres : Dangerous heart surgery in Florida

There were major problems in the theatres at the Palm Beach Gardens hospital in Florida. There were multiple breaches in aseptic technique including a plague of insects. Fixing the problems would have been very expensive and involved closing the theatres for a period of time so losing income. Although Medicare surveillance and the JCAHO were aware of the problems nothing happened until 106 patients (or the relatives of the dead) won US $31 million in a court action because of the impact of avoidable septic complications on their lives. It seems that doctors were prepared to continue operating in spite of the risks.

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New page 2007

The saga of failed sterilizers

When the sterilizers failed at Garden Grove hospital to the extent that instruments were not fully sterilised, steriliser staff were told not to tell the doctors lest they refuse to operate. This would have impacted on income. It is the surgeons responsibility to make the best decisions in the interests of their patients. When the senior surgeon found out he resigned in protest, spoke out and reported it to the JCAHO. The JCAHO took no action.

Click Here to go to this web page

New page 2007

Tenet has problems with its doctors

 This web page examines some medical whistle blowing at Tenet. Many of Tenet's money losing hospitals were bought and run by the doctors who worked there in order to maintain their practices and the services to the community. This was sometimes with financial backers. The page looks at the appropriateness of doctors owning and running hospitals in a competitive commercial marketplace.

The page examines the flight of doctors from Tenet's hospitals, the advent of "splitter physicians, the consequences for Tenet's bottom line, and the problems Tenet will experience in wooing them back.

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Updated 2007

Failures in Care

Objective data about poor care comes from oversight by government agencies. As is well illustrated in aged care they are notoriously bad at detecting problems and the agencies are very lenient. It has required community effort, angry patients or relatives, and whistle blowers to expose the extent of the problems. There are however some glaring negative reports published about government inspectors findings at some Tenet hospitals.

The difficulties are that acute care hospitals treat a vast range of disease processes and easily measurable major adverse events like death are rare so do not show up early. It is difficult to find really comparable hospitals as hospitals often focus on different communities and have different areas of expertise. The data on which more detailed analyses depend is controlled by the hospitals.

The nurses have addressed the problems they are all aware of by comparing available figures for staffing levels and staffing skills in Tenet hospitals with those for other hospitals, and with individual hospitals before they were purchased by Tenet, noting the trends. They compare the clearly demonstrated reduced staffing with the simultaneous increase in complex cases which need more nurses with greater skills. They contrast this with increases in Tenet's prices and executive remuneration. They quote studies which clearly link mortality to staffing levels.

This page looks at the exposure of failures in care in Tenet hospitals by government bodies, by nurses, by doctors and by patients.

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Updated 2007

The Nursing Disputes

The nurses have been the first to see failures in care from Tenet's cost cutting. Small individual protests at corporate hospitals have all too often resulted in a punitive response. An excuse is found to terminate those who protest. As a consequence the nurses have been driven into unions. The disputes between corporate chains and the unions have been bitter and protracted.

While poor pay has been an important issue, working conditions, staffing levels, excessive overtime and the safety for patients and staff have been leading issues. While self interest is clearly a powerful stimulant corporate responses dismissing the issues because they are self serving is disingenuous. The nurses have been consistently on target and the community knows this. As a consequence the nurses have received considerable public support and Tenet bad publicity.

I have some information about three major disputes, the strikes at Tarzana in California in 1998, the bitter dispute in Worcester Massachusetts in 2000, and the angry dispute in California where Tenet's headquarters and the majority of Tenet hospitals were situated in 2002.

CLICK HERE -- to access this page

New page 2007

Tenet Healthcare
Accreditation and oversight page

This web page examines the repeated failures of state and Medicare oversight and regulation as well as accreditation agencies when assessing NME and Tenet hospitals, during both the first (1990s) and the second (2000s) scandals. It examines the reasons for this. It documents government and political relationships as well as the presence of Tenet staff holding senior positions on accreditation bodies.

Click Here to access this web page

Updated 2007

Tenet Healthcare Additional Issues

Dangerous Incentives, Remuneration, Insider Trading,
Political Links, and Court Actions

This web page deals with a number of additional issues.

Financial incentives have been probably the most dangerous of business practices. They have been at the root of the majority of major frauds and the misuse of patients. They are also the key to market success. National Medical Enterprises in the 1990s and Tenet in 2002 relied heavily on financial incentives as rewards for success and "beatings" of one sort or another for failures. Tenet paid its hospital executives large salaries but most doubled this with incentive payments and bonuses.

Swollen headed company executives and board members have paid themselves massive salaries, bonuses, and perks even when the company was performing poorly. Tenet has led the pack. Underpaid and overworked Tenet nurses providing under-resourced care have been incensed by this.

When companies fail insider trading is common in the preceding period. Allegations and court actions usually follow. Tenet's collapse surprised insiders and there was little opportunity. The SEC set up an informal process to monitor Tenet.

Political links and donations to politicians are common but Tenet is secretive about this. Documents tabled in court show that Barbakow is a "Bush pioneer", those raising over US $100,000 for Bush. Government and political links and support emerged after the 2002 scandal. In 2007 a recent democratic presidential candidate, and the current republican president's brother, just resigned as governor of Florida are both members of Tenet's board.

Hundreds of court actions have been commenced against Tenet, Barbakow, directors and doctors. Most relate to delay in disclosing information, misinformation to the market, unnecessary procedures, and price gouging.

CLICK HERE -- to access this page

Updated 2007

The Rewards of Deviance
(1993 objection in NSW, Australia)

In June 1993 I made a submission to New South Wales Health Department and Justice Yeldham objecting to a hospital license for the new St. George's Hospital in Sydney. It drew all the available information together. The final section looks at the pressures on Yeldham and predicts what would happen - even that cardiac patients might be exploited. In the light of what has happened since I can't resist the temptation to put an extract from this on the www.

CLICK HERE -- to access this

Written 2007 Updated Aug 2008

Tenet and Hurricane Katrina

In 2005 one of Tenet's hospitals in New Orleans, The Memorial Hospital, was severely flooded during Hurricane Katrina and a number of patients died. Tenet was blamed for this but in fact it behaved better than most others and eventually organised a rescue of patients and staff trapped there under appalling conditions. In typical Tenet fashion it distanced itself from some of its staff and offered them little help when they were unreasonably charged with murder. It was the community and colleagues who came to the rescue.

At the time there was a lot of confusion at the hospital and it seemed that it would be impossible to evacuate seriously ill and terminally ill patients. Because of this patients in extreme distress and expected to die were sedated with Morphine and Midazalam. Subsequently allegations were made that a doctor and two nurses had deliberately euthanised some of these patients rather than leave them alive to suffer alone when everyone else was evacuated. An over enthusiastic attorney general, looking for re-election clapped them in handcuffs and paraded them before the press charging them with murder. The community and the health professionals rallied behind them and responded in what became a trial by media. A grand jury refused to indict the doctor and the attorney general was not re-elected.

Because some relatives have filed civil suits the doctors and nurses have not yet spoken to give their versions of what actually happened. Citizens formed a committee to press for changes to the law so that volunteers who offered assistance during disasters had more protection from legal and civil actions. The Louisiana government passed this into law.

I have kept this page on the web site because of the multiple ethical and community issues it raises and because of the insight it gives into the way the USA functions when end of life decisions are forced into the public arena.

Click Here to explore these issues.

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Other web sites

Julie Inouye formed a group to fight Tenet's takeover and attempt to close their local hospital in Los angeles. She put a lot of information about this battle on to a web site. It can be accessed at

In addition Melissa Davis at The has closely followed and carefully researched this company. Her articles are lengthy, detailed and perceptive. I have taken the liberty of quoting from many. They can be found at

Tenet Healthcare's web site is at

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Web Page History
This page first created April 2000 by
Michael Wynne
largely rewritten July 2003: Major Update July 2007