Los Angeles Business Journal

Health Net Ends Contracts with Area Tenet Hospitals

By Deborah Crowe Originally published December 27, 2012 at 2:09 p.m., updated December 28, 2012 at 10:30 a.m.

Health Net Inc. on Thursday said it ended contracts with Tenet Healthcare Corp.’s six hospitals in Southern California over a dispute on reimbursement rates.

The Woodland Hills health insurer said the terminations were effective midnight on Dec. 21. The affected hospitals are Lakewood Regional Medical Center in Lakewood, Los Alamitos Medical Center in Los Alamitos, Desert Regional Medical Center in Palm Springs, Fountain Valley Hospital and Medical Center in Fountain Valley, John F. Kennedy Memorial Hospital in Indio, and Placentia Linda Hospital in Placentia.

“Tenet Healthcare has refused our requests to negotiate a new contract that more accurately reflects current statewide market conditions,” Steve Sell, president of Health Net’s Western Region Health Plan, said in a statemen, adding that Tenet wanted a higher reimbursement rate than Health Net was willing to grant.

A Tenet statement released late Thursday disputes that the two companies were far from reaching a contract.

"At the time of our last meeting, we were in full agreement on the terms of our contract," the company said. "It is unclear to us as to why Health Net issued a contract termination and publicly released inaccurate information. We have full agreement with Health Net on reimbursement rates at these six hospitals. We are puzzled and disappointed by their public comments."

Health Net shares on Thursday closed down 31 cents, or 1 percent, to $24.50 on the New York Stock Exchange.