Tenet CEO: Hospitals will unite on reform

Trevor Fetter, the President and Chief Executive Officer of Tenet Healthcare Corporation, speaks at the Reuters Health Summit in New York, November 10, 2009.

NEW YORK (Reuters) - The head of the nation's third-largest U.S. hospital chain sees the industry ultimately uniting behind final healthcare legislation once details are hammered out over taxes, payments and a so-called public option government insurance plan.

Industry groups for hospitals, which cover the bulk of the uninsured in the United States, have been divided over such details but overall support Democratic efforts to expand insurance coverage, Tenet Healthcare Corp (THC.N) Chief Executive Trevor Fetter said on Tuesday.

"We're pretty supportive of the direction in which they're going," Fetter told the Reuters Health Summit in New York. "If there's a pragmatic, practical solution that comes ... I think the hospital industry will rally behind it."

While not as prominent in the nation's health reform debate as insurance companies or drugmakers, hospitals provide the bulk of free care to uninsured patients who seek emergency rooms or have life-threatening problems. Such uncompensated care can be costly, Fetter said.

The industry so far has seen a slight split in Washington between hospitals that are for-profit and the rest.

The Federation of American Hospitals (FAH) represents roughly two dozen for-profit hospital chains anxious to stem losses by seeing more paid patients. Its members account for hundreds of hospitals and roughly 20 percent of U.S. hospital beds, FAH spokesman Richard Coorsh said. The American Hospital Association (AHA), which represents 5,000 hospitals includes some for-profit ones, also backs reform. But it faces less market pressure and has been more vocal about its concerns.

When the House passed its measure, AHA called on lawmakers to add provisions to protect hospitals from a public plan that would pay rates as low as those seen in the Medicare program for the elderly. It also sought protection from possible fees that devicemakers could pass on.

FAH more quietly endorsed the bill and said it looked "forward to endorsing health reform legislation that further embraces market-based principles and contains additional improvements as the process moves forward."

Other publicly-traded or investor owned hospital companies include Universal Health Services Inc (UHS.N) and Community Health Systems Inc (CYH.N), among others.

The industry earlier this year accepted a deal with some senators to accept $155 billion in Medicare payment cuts over 10 years to help pay for reform. That could benefit hospitals by turning unpaid charity care cases into ones covered by insurers or expanded government programs for the poor, thus reducing losses from the uninsured.

Senate Democratic leaders have yet to unveil in public a final plan, but the U.S. House of Representatives passed its bill on Saturday. A consolidated bill would have to be negotiated before President Barack Obama could sign it into law.

"The big picture is covering the uninsured," said Fetter, whose company belongs to both groups. "When you get to some of the details of how it's being done and other provisions that might be in the bill, we might have differences of point."

One of those details includes an industry-wide device tax of anywhere between $2 billion and $4 billion a year that devicemakers have said they plan to pass on to hospitals.

"There's a limit to how much we can continue to pass on to commercial insurers and employers," Fetter said.

He also blasted Congress for dodging the issue of illegal immigrants, who often seek hospital care but seldom have insurance. Some proposals prohibit such patients from receiving subsidies and other government benefits but do take into account that hospitals must still provide emergency care.

"It's a cost issue for hospitals, it's embarrassing for our country, and it puts terrible distress on those people who don't have health insurance and then have some catastrophic issue," Fetter said.

Shares of Tenet closed up 2.6 percent or 14 cents to $5.44 on the New York Stock Exchange.

(Reporting by Susan Heavey; additional reporting by Lisa Richwine, editing by Matthew Lewis)