Wednesday, May 10, 2000
By Lisa Eckelbecker
Telegram & Gazette Staff 

WORCESTER, Mass.—The nurses strike at Worcester Medical Center turned into a disagreement over accounting yesterday. City Councilor Timothy P. Murray, citing income statements filed with the state, said that Tenet Healthcare Corp. apparently reaped $78 million in hospital profits in Worcester over the last two years and should meet its obligation to the community by settling its disagreement with striking nurses.

But hospital officials said the statements Mr. Murray cited do not completely reflect the hospital's financial status, including millions of dollars in state and federal taxes it owed and the debt expenses Tenet assumed from the hospital. "For the year 2000, the profit that we are showing is not sufficient enough to cover the debt service of the Worcester Medical Center, so we're not making tons of money," said William W. George, chief financial officer for the Worcester Medical Center.

Mr. Murray said he would like Tenet to verify 1998 and 1999 financial statements for St. Vincent's Hospital that were filed with the Massachusetts Division of Health Care Finance and Policy. Tenet bought St. Vincent's Hospital in 1997, built the new Worcester Medical Center downtown and relocated the hospital in early April. The statements show that St. Vincent's Hospital reported net income of $37.7 million in 1998 and $40.7 million in 1999. Tenet has an obligation to its shareholders, but also to Worcester, Mr. Murray said.

"I think it's important for this hospital and this community in general that we try to settle this strike as soon as possible," Mr. Murray said. But those financial statements do not include state and federal taxes the hospital owed in 1998 and 1999, which would have reduced net income by more than 40 percent, Mr. George said. Tenet pays the taxes for all its hospitals and does not require individual hospitals to account for those taxes, he said.

In addition, Tenet took over millions of dollars in hospital debt, reducing the hospital's interest expenses, Mr. George said. It also assumed about $11 million of annual depreciation and amortization expenses, he said. One-time accounting transactions related to Tenet's acquisition of St. Vincent's Hospital changed the picture further so that when all factors are considered, the hospital's income in 1998 and 1999 was about the same as the $3.7 million in income it reported in 1996, Mr. George said. Nor is the hospital reaping large profits this year, he said.
"Through the month of March, year to date, we are showing a pretax income of slightly more than $3 million," he said.

"We're showing a corporate tax liability of about 40 percent. So our after-tax profit is about $1.8 million, which is a profit of about 1.25 percent of our net revenues." Mr. Murray said he would be asking the city's legislative delegation to ask the state to compile a ranking of all Massachusetts hospitals by profit. That kind of information, he said, would enhance discussions about health care in the state. Worcester Medical Center nurses went on strike March 31 after contract talks with Tenet broke down over the issue of mandatory overtime. Tenet wants the right to require nurses to work up to eight additional hours of overtime per shift when needed. The nurses have rejected that, saying it endangers patient care. 

© 2000 Worcester Telegram & Gazette

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