Tenet CEO sees 'plenty of room' to grow by expanding margins

By Jennifer Lanning Drey

Portland, Ore., Sept. 14 - Tenet Healthcare Corp. has "plenty of room" to grow through margin expansion without relying on acquisitions, Trevor Fetter, Tenet's chief executive officer, said Tuesday during a presentation at the Morgan Stanley Global Healthcare Conference in New York.

"Our story is really one of going from where we are today in our EBITDA margins to a level that's closer to industry average or at industry average," Fetter said.

"We don't necessarily need to do acquisitions to create growth in EBITDA."

Tenet is actively acquiring outpatient centers, but is unlikely to make acquisitions for its services segment, which tend to be "pricy," he said.

Acute care acquisitions will likely be a part of the company's story in the future, but recent potential opportunities have been unattractive, he said.

In the meantime, Tenet continues to work to improve its margins by increasing capacity use through volume growth, growing its outpatient business and expanding its services business, Fetter said.

Fetter also said the company is now very focused on generating free cash flow after resolving legacy issues and making its final payment to the Department of Justice in August.

"We think weak free cash flow has posed a barrier to growth in value for the company, so we'll be very focused on free cash flow," he said.

Tenet is a Dallas-based hospital chain.

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