Tenet Healthcare Corporation
Healthcare Providers & ServicesFounded 1969- Updated June 2025
Reviewed by Swet Parvadiya
Last reviewed: June 2025
CorpDigest
Tenet Healthcare Corporation
Company History
Founded 1969 in Dallas, Texas
Last reviewed: 2025-06-08 · By Swet Parvadiya
In 1981, Oral Roberts opened the City of Faith Medical Center in Tulsa, Oklahoma — an $80 million facility attached to his evangelical university, conceived as a place where prayer and medicine would operate together. The hospital struggled from the first year. Demand never matched the ambition. By 1987, Roberts' organization was selling assets to stay solvent, and a hospital company called National Medical Enterprises acquired parts of the City of Faith infrastructure for prices that reflected the financial desperation of the seller.
National Medical Enterprises itself was not a clean acquirer. By the early 1990s, NME faced federal investigations into Medicare and Medicaid billing fraud at its psychiatric hospital chain — a scandal that produced criminal convictions and ultimately forced the company into settlement negotiations with the US Department of Justice. The liability that came with NME's history transferred directly to the successor entity.
In 1995, NME merged with American Medical International to form Tenet Healthcare Corporation. The combined company inherited balance sheet stress, regulatory scrutiny, and operational challenges from both sides of the merger. Management spent the next decade navigating fraud settlements and trying to stabilize a hospital network built on acquisitions that had not always been executed with discipline.
The 2006 Medicare fraud settlement cost $900 million and forced a reckoning about how the company was structured. The 2014 acquisition of controlling stakes in United Surgical Partners International — the USPI ambulatory surgery center business — marked the beginning of a different strategy: lower-cost outpatient settings, higher-acuity procedures, and the gradual reduction of dependence on inpatient hospital volumes that carry heavy fixed-cost structures.
Jeffrey Barbakow is the executive most responsible for creating the modern Tenet Healthcare Corporation, having served as the Chairman and CEO of National Medical Enterprises (NME) before engineering its massive, transformative merger with American Medical International (AMI) in 1995. Barbakow's vision was to create a national healthcare powerhouse with the scale necessary to negotiate favorable managed care contracts with the rapidly growing dominance of HMOs and PPOs, a strategy that defined the consolidation era of the 1990s hospital industry. Under his leadership, the newly formed Tenet Healthcare aggressively pursued market share, expanding its footprint to over 100 hospitals and generating $10 billion in annual revenue. However, this aggressive growth strategy was accompanied by a deeply flawed corporate culture that prioritized revenue generation over regulatory compliance, culminating in the early 2000s in a series of devastating billing scandals, including a $900 million Medicare fraud settlement in 2006. The financial and reputational damage from these scandals triggered a massive exodus of executive leadership and a collapse in the company's stock price, leading to Barbakow's resignation in 2005 and the eventual appointment of Trevor Fetter, who began the agonizing process of cultural transformation and operational turnaround that would eventually stabilize the company.
Oral Roberts was a prominent American televangelist and faith healer whose ambitious, ultimately disastrous foray into hospital administration profoundly impacted the early history of the entity that would become Tenet Healthcare. In 1981, Roberts announced the construction of the City of Faith Medical and Research Center in Tulsa, Oklahoma, a massive, $80 million, 60-story medical complex that he claimed would be divinely guided to cure diseases that modern medicine could not. Roberts famously declared that God would reveal to him the names of 100,000 donors who would each contribute $1,000 to fund the project, a fundraising strategy that ultimately failed to materialize, leaving the facility severely undercapitalized from its inception. The City of Faith opened in 1987 but was immediately plagued by massive cost overruns, low patient volumes, and a fundamental lack of understanding of the complex economics of acute care hospital operations, forcing Roberts to file for bankruptcy later that same year. The facility's assets were eventually acquired by National Medical Enterprises (NME), a rapidly growing hospital management company that was aggressively consolidating the industry, and this acquisition injected the toxic legacy of the City of Faith failure into the corporate DNA of what would eventually become Tenet Healthcare following the 1995 NME-AMI merger.
The legal predecessor to Tenet Healthcare was incorporated in California as Pacific Medical Center, establishing the foundational corporate entity that would eventually be acquired and restructured into the modern Tenet enterprise.
Televangelist Oral Roberts founded the $80 million City of Faith Medical and Research Center in Tulsa, Oklahoma, a catastrophic financial failure that filed for bankruptcy in 1987 and whose assets were later acquired by National Medical Enterprises.
National Medical Enterprises (NME) completed its $2.2 billion merger with American Medical International (AMI), instantly creating the second-largest for-profit hospital chain in the US with over 100 hospitals and rebranding as Tenet Healthcare Corporation.
Tenet Healthcare agreed to pay $900 million to resolve federal and state allegations of systematic upcoding, unbundling, and illegal kickbacks to physicians, marking the largest healthcare fraud settlement in US history at the time and forcing a massive cultural and operational turnaround.
Tenet began aggressively acquiring controlling stakes in its United Surgical Partners International (USPI) joint ventures, consolidating the EBITDA of these highly profitable ambulatory surgery centers onto its balance sheet to drive outpatient growth.
Saum Sutaria was appointed CEO of Tenet Healthcare, initiating a new era of financial discipline, aggressive debt reduction, and strategic optimization that would see the company retire over $4 billion in long-term debt by FY2024.
Tenet Healthcare reported $20.33 billion in consolidated FY2024 revenue, generating $2.74 billion in Adjusted EBITDA and successfully reducing its Net Debt to Adjusted EBITDA leverage ratio to 2.1x, positioning the company for a potential investment-grade credit rating upgrade.
To create a national healthcare powerhouse with the scale necessary to negotiate favorable managed care contracts with the rapidly growing dominance of HMOs and PPOs, instantly creating the second-largest for-profit hospital chain in the US.
National Medical Enterprises (NME), the predecessor to Tenet, acquired the assets of Oral Roberts' bankrupt City of Faith Medical Center to expand its hospital footprint in the Tulsa, Oklahoma market.
Tenet began aggressively acquiring controlling stakes in its existing United Surgical Partners International (USPI) joint ventures to consolidate the EBITDA of these highly profitable ambulatory surgery centers onto its balance sheet and drive outpatient growth.
Tenet Healthcare Corporation was founded in 1969 in Los Angeles as National Medical Enterprises by three partners: investment banker Jeffrey Barbakow's predecessors Richard Eamer, Leonard Cohen, and John Bedrosian. The founding business model combined ownership of acute-care hospitals, psychiatric facilities, and specialty hospitals into a national for-profit chain at a time when most US hospitals were nonprofit or government-owned. National Medical Enterprises, abbreviated NME, took advantage of the post-Medicare environment created in 1965 to roll up community hospitals and to build new facilities across the Sun Belt and other growth markets. By the late 1980s NME operated roughly 90 acute-care hospitals plus a large psychiatric and substance-abuse division. The psychiatric division became central to a major Medicare fraud scandal in the early 1990s, which led to a $379 million settlement with the US government in 1994, the largest healthcare-fraud settlement of that era, plus state-level penalties and substantial damage to the company's reputation. In 1995 the company rebranded as Tenet Healthcare Corporation to distance itself from the scandal and to signal a strategic restart.
National Medical Enterprises rebranded as Tenet Healthcare Corporation in March 1995 to reset its public identity after a devastating Medicare fraud scandal that culminated in a $379 million federal settlement in 1994. The scandal centered on the company's psychiatric and substance-abuse hospitals, which were accused of holding patients longer than medically necessary, paying illegal referral fees, and submitting fraudulent claims to Medicare and private insurers. The investigations led to plea agreements, individual prosecutions, divestiture of the psychiatric business, and structural reforms in compliance and governance. The Tenet name was chosen to signal a new corporate ethos centered on stated principles of patient care, ethics, and accountability, with the word tenet itself meaning a core belief or principle. The rebrand was paired with the appointment of new senior leadership, an exit from the psychiatric hospital business that had been at the heart of the scandal, and a refocusing on acute-care general hospitals. The company also adopted a new ticker, THC, on the New York Stock Exchange. The rebrand has held for nearly three decades despite later operational and reputational challenges under successive management.
After the 1994 Medicare fraud settlement of $379 million and the 1995 rebrand, Tenet Healthcare focused on consolidating and growing its acute-care hospital business through the late 1990s and early 2000s under CEO Jeffrey Barbakow. The company executed several major acquisitions, including the 1995 purchase of Atlanta-based American Medical Holdings, which doubled the size of the hospital portfolio and gave Tenet roughly 130 hospitals at the time. The strategy emphasized for-profit acute-care hospitals in Sun Belt growth markets, including California, Texas, Florida, and the Southeast, with central management of revenue cycle, supply chain, and physician relationships. However, by 2002 to 2003 the company was hit by a new wave of allegations and investigations related to aggressive Medicare outlier billing and kickback-style physician relationships. The crisis led to a major share-price collapse, the 2003 ouster of Barbakow as CEO, settlements with the US Department of Justice that ultimately exceeded $900 million when combined, and significant divestitures of underperforming hospitals. Trevor Fetter, the former CFO, became CEO in 2003 and led a multi-year restructuring that stabilized the business through asset sales and operating-cost reductions.
Tenet Healthcare has evolved from a pure hospital chain into a three-segment company organized around Hospital Operations, USPI ambulatory surgery centers, and Conifer Health Solutions revenue-cycle services. The shift accelerated under CEO Trevor Fetter, who led the company from 2003 to 2017 and oversaw the 2013 acquisition of Vanguard Health Systems for approximately $4.3 billion to add hospitals and a managed-care heritage. The 2015 transaction with United Surgical Partners International created a joint venture that combined Tenet's existing surgery centers with USPI's into a leading US ambulatory-surgery network, with Welsh Carson Anderson and Stowe initially retaining a stake. Conifer Health Solutions was spun out of Tenet's internal revenue-cycle operations and grew into a third-party services business for other hospitals. Under CEO Saum Sutaria, who took over in June 2021, Tenet has accelerated divestiture of acute-care hospitals while doubling down on USPI ambulatory growth, including the 2022 acquisition of the remaining USPI stake from Welsh Carson for $1.2 billion. By 2024 USPI had become a larger driver of profit growth than the hospital segment, marking a structural shift from inpatient hospital operator to a diversified care-delivery and services company.
Tenet Healthcare Corporation is headquartered in Dallas, Texas, having moved from Santa Barbara, California after the early 2000s restructuring. The Dallas location consolidated executive offices, finance, IT, and revenue-cycle operations close to the company's largest concentration of hospitals and physicians in Texas and the broader Sun Belt. As of recent years Tenet operates approximately 61 acute-care and specialty hospitals primarily in Texas, California, Florida, and other states, more than 500 ambulatory surgery centers and surgical hospitals through USPI, and revenue-cycle services serving hundreds of healthcare clients through Conifer. The company employs roughly 100,000 people and contracts with thousands of affiliated physicians. Revenue in fiscal 2024 was approximately $20.7 billion, with operating EBITDA increasingly contributed by USPI rather than by the hospital segment as the company has divested lower-performing hospitals. Market capitalization sits around $13 to $20 billion depending on share price. Tenet shares trade on the New York Stock Exchange under ticker THC and the company is a constituent of the S&P 500 healthcare sector. The corporate strategy is now centered on continued shift toward higher-margin ambulatory care.