Health Net Inc.
) announced that its subsidiaries have inked new two-year
Tenet Healthcare Corp.
). The agreements allow Health Net's members to utilize the
medical care facilities offered by 11 hospitals of the latter in
Consequently, the members of Health Net have regained access
to the 6 hospitals of Tenet Healthcare in Southern California,
which were removed from the health maintenance organization's
network in Dec 2012. The company had agreements with Desert
Regional Medical Center, Fountain Valley Hospital and Medical
Center, John F. Kennedy Memorial Hospital, Lakewood Regional
Medical Center, Los Alamitos Medical Center and Placentia Linda
Hospital. These hospitals have been re-added to Health Net's
network retrospectively, thereby eliminating the impact of the
Health Net's subsidiaries had terminated the 3-year contracts
with these 6 hospitals of Tenet Healthcare, in effect from Dec
21, 2012, due to the inability of the companies to reach an
agreement regarding the terms for extension. Health Net was in
favor of changing the reimbursement rates offered by Tenet
Healthcare considering the market conditions in California.
The company wanted to bring the reimbursement rate at par with
the medical consumer price index, which exceeded the 3% mark at
that time. Additionally, Health Net wanted the reimbursement rate
for those programs, which are financed by the state or the
federal government, to be based on the funding of these
However, these terms were not acceptable to Tenet Healthcare.
Consequently, the two companies failed to reach an agreement and
Health Net decided to use its contractual option to terminate the
agreements, which were already on the verge of expiration, with
all 6 Tenet Healthcare hospitals.
The agreement will help Health Net offer good quality health
care with affordable benefits to its members. The other 5
hospitals included in the agreement are Doctors Hospital of
Manteca, Doctors Medical Center of Modesto, San Ramon Regional
Medical Center, Sierra Vista Regional Medical Center in San Luis
Obispo, and Twin Cities Community Hospital in Templeton.
Both Health Net and Tenet Healthcare currently carry a Zacks
Rank #3 (Hold). Other stocks in the medical sector that are
currently performing well include
Acadia Healthcare Company, Inc.
) - Zacks Rank #1 (Strong Buy) and
American Caresource Holdings, Inc.
) - Zacks Rank #2 (Buy).
ACADIA HEALTHCR (ACHC): Free Stock Analysis
AMER CARESOURCE (ANCI): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
TENET HEALTH (THC): Free Stock Analysis
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