Tenet Healthcare, one of the country’s largest for-profit hospital systems, has a new plan to accelerate its turnaround: Send a bunch of jobs out of the country.
At an investor conference last week and during an interview in Dallas, officials said the company is looking “aggressively” at offshoring jobs. And the action won’t be limited to Conifer, its revenue billing operation in Frisco, which would seem a prime target.
“We’ll look at aggressively doing that across the whole enterprise,” CEO Ronald Rittenmeyer said at Tenet headquarters in downtown Dallas.
He said the company hadn’t determined the number of employees who would be displaced, which he expects to happen over the next 12 to 18 months.
“I imagine it will be more than 1,000, but I don’t think it’s gonna be … certainly not 10,000 or 5,000,” he said. “The number moves around, depending on what we’re looking at.”
Fewer than 1,000 information technology jobs are already performed for the company in India, he noted. Tenet outsources that work to NTT Data, which then offshores some of the workload. Tenet has not previously sent its own administrative functions abroad, he said.
Doctors, nurses and those acting directly with patients won’t be affected. But some workers who handle corporate functions will be on the line.
Tenet has about 6,150 employees in North Texas, which includes the headquarters of three major operations, a spokeswoman said.
The publicly traded corporation is based in a tower in downtown Dallas. Its billing unit, Conifer, is in Frisco. Its ambulatory services operation, United Surgical Partners International, is in Addison.
“Obviously, we’ll look at all three headquarters,” Rittenmeyer said of the offshoring possibilities.
The company has not told employees about the plan, even though the CEO revealed it to investors at a public forum in San Francisco. Rittenmeyer said he wanted investors to know what was ahead for 2019, but it was too early to do the same with workers.
“People will want to know specifics — how does it affect me?” he said. “I can’t answer where or who, not at this point.”
Rittenmeyer expects to reveal more details at an employee town hall meeting, perhaps in the first quarter. He said workers shouldn’t be overly concerned, in part because changes won’t be immediate.
“It’s not tomorrow morning — we’re not lining the buses up outside,” he said.
In addition to offshoring, he told investors that Conifer was still for sale. Although it was put on the market about a year ago, his reaffirmation gave the stock price a boost — and gave employees more to ponder.
Tenet has been through a tumultuous period. Early in the decade, it expanded rapidly, buying hospitals and building new medical towers. As some bets failed to pay off and it had to pay huge legal settlements, Tenet racked up big losses and lost over half its stock market value.
That led to unrest among shareholders, including activist investors who took a big stake in the company. Rittenmeyer, a board member since 2010, stepped up to become executive chairman in August 2017. Two months later, he became CEO.
In just over a year, Tenet has cut $250 million in costs and turned over much of its leadership team. Twenty percent of corporate executives have changed, including the CEO, COO and chiefs of technology and marketing. Tenet changed 35 percent of its hospital leaders after eliminating a layer of regional overseers. Half of the board of directors is new.
That’s a lot of turnover, Rittenmeyer conceded, but that can be good or bad, depending on who departs and who arrives.
“For the most part, it’s the right turnover,” he told analysts.
How’s that affecting employee morale? He said feedback has been positive because new workers brought a fresh perspective and decision-making is faster.
“I’m sure some people didn’t like it, but the reality is: We needed to change,” Rittenmeyer said.
Tenet has 68 hospitals in the U.S., including the San Antonio, El Paso and Brownsville markets. Last year, Tenet sold a handful of hospitals in the Dallas area, but it owns over 40 surgery and urgent care centers here.
Three years ago, Tenet had nearly 135,000 employees, and today it has 115,000 nationwide. Rittenmeyer attributed most of the job losses to the sale of hospitals and other business units.
Tenet stands to benefit from the corporate tax cuts enacted at the end of 2017. The company said tax payments would fall by $10 million to $20 million annually for the next several years.
President Donald Trump helped sell the tax cuts by insisting they’d lead to more good jobs in the U.S. Now that Tenet wants to ship out jobs, how does that square?
“You’re implying that it’s financial, and it’s not all financial,” Rittenmeyer said, adding that the move was “for business reasons.”
Offshoring will allow Tenet to invest in other areas such as surgery centers, he said.
As a former top executive at EDS, which pioneered outsourcing, he said he’s very familiar with the practice. EDS even owned companies in India and elsewhere for that purpose.
In the beginning, offshoring was all about lowering costs, and labor savings today can still top 30 percent. That’s important for a company rebounding from over $1 billion in net losses.
“We’re in the business to make a profit — No. 1,” Rittenmeyer said. “That’s our job, so we’re always going to be looking to reduce our costs. That’s just the facts.”