President and chief executive officer, Tenet Healthcare Corporation
Born: 1960, in San Diego, California.
Education: Stanford University, bachelor's degree, 1982; Harvard Business School, MBA, 1986.
Family: Married Melissa Foster; children: two.
Career: Merrill Lynch Capital Markets, 1982–1984, investment-banking analyst; 1986–1988, associate; Metro-Goldwyn-Mayer/United Artists, 1988–1993, senior vice president; 1993–1995, senior executive vice president and CFO; Tenet Healthcare, 1995–1996, executive vice president; 1996–2000, CFO; Broadlane, 2000–2002, chairman and CEO; 2002–, chairman; Tenet Healthcare, 2002–2003, president, 2003–, CEO.
Address: Tenet Healthcare Corporation, 3820 State Street, Santa Barbara, California 93105; http://www.tenethealth.com.
■ Trevor Fetter took over as CEO of Tenet Healthcare Corporation in 2003 when the company, which owns numerous hospitals nationwide, came under investigation for questionable billing practices. After taking over day-to-day operations of the company, Fetter focused on addressing litigious and investigative issues, stabilizing operations, and cutting costs without sacrificing quality. Known for his low-key approach to management, Fetter was praised by his coworkers and friends for his integrity and honesty, which were an asset to Tenet's tarnished corporate image.
A native Californian, Tenet graduated from Stanford with a bachelor's degree in economics in 1982 and went to work for Merrill Lynch Capital Managements as an investmentbanking analyst. He then took two years off to earn his MBA at Harvard. After returning to Merrill Lynch, he focused on corporate finance and advisory services for healthcare and entertainment companies.
Tenet first met and worked for Jeffrey Barbakow at Merrill Lynch. When Barbakow left Merrill Lynch in 1988 to become chairman, president, and CEO of the movie and entertainment company Metro-Goldwyn-Mayer/United Artists, he asked Tenet to join him as senior vice president of MGM. In 1993 Fetter was appointed the company's senior executive vice president and chief financial officer. According to entertainment industry analysts, Fetter was able to maintain a low profile in a high-profile industry while reducing the company's debt and instilling corporate financial discipline.
Many saw Fetter's positive personal and business attributes as giving him a bright future in the entertainment industry. In an interview with Vincent Galloro for Modern Healthcare , the global corporate-finance expert Harry McMahon noted that Fetter's "skills are in short supply in the entertainment industry; his combination of sophisticated financing skills and high integrity, in my experience, is a powerful mix" (June 2, 2003).
Fetter soon demonstrated that he was not addicted to the glitz and glamour of the Hollywood entertainment industry. Rather, his loyalties appeared to lie with Barbakow. By 1995 Barbakow had left MGM and was head of the newly named Tenet Healthcare, formerly known as National Medical Enterprises. Before long he approached Fetter about joining Tenet. Fetter readily admitted that he knew little about the business of health care; to remedy this lack of insight, he spent a day with a health-care consultant learning all he could about the industry. Although his interest was piqued by the end of the day, he was still unsure that he wanted to shift careers. However, in October 1995 Tenet shocked his friends and colleagues at MGM and in the entertainment industry by deciding to join Tenet.
Fetter came on board Tenet as executive vice president; a few months later he was appointed CFO. Many within Tenet's corporate structure viewed Fetter with skepticism, since he came from outside the ranks and had little experience in health care. From 1995 to 2000 Fetter was responsible for overseeing a wide range of Tenet's corporate functions in the areas of finance, law, information systems, human resources, communication, and administration, among others. He also played an active role in planning future strategic initiatives, acquisitions, and ventures.
In 2000 Fetter once again shocked his colleagues when he decided to leave Tenet, which at the time was the nation's second-largest investor-owned health-care-services company. Fetter had been interviewing prospective CEOs for Broadlane, a materials-management company based in San Francisco that spun off from Tenet in 2000. After conducting several interviews, Fetter decided he was best suited for the job.
As chairman and CEO of Broadlane, Fetter built a team that began with only 26 employees; by 2002 Broadlane had 280 employees and was one of the leading providers of total cost-management services to the health-care industry. Fetter said that he learned several lessons along the way. He gained experience in building a management team and was privy to an inside look at the hospital industry's nonprofit sector. He also learned about the tendency toward risk-averse management in the field of health care, as hospitals were hesitant to accept the cost-cutting initiatives suggested by Broadlane. Fetter came to believe that risk aversion was not always the best approach. "If you ever want to truly drive change in healthcare in America, that has got to change," he told Galloro in Modern Healthcare , going on to say that "seeking better performance has to become ingrained in the culture" (June 2, 2003).
Despite the fact that he had turned Broadlane into a solidly profitable company with sound capitalization, Fetter once again surprised those around him by deciding to step down as CEO. At the behest of Barbakow, Fetter signed on to assume the newly created post of president of Tenet in November 2002. Fetter rejoined Tenet when it was in the midst of turmoil. Just a few weeks earlier the company had been accused by the federal government of applying Medicare's outlier policy too aggressively. This policy allows hospitals to bill Medicare above the average cost of care under special circumstances, typically involving severely ill patients. Because Tenet's outlier payments were approximately four times the average hospital's billings in this area, the company came under investigation by the Department of Health and Human Services. In addition, two surgeons at Tenet's Redding Medical Center in California were accused of ordering unnecessary heart surgeries and other procedures, and a separate investigation was initiated by the FBI.
Fetter took several steps to pull Tenet through its crisis, including instituting a new corporate policy regarding Medicare outlier payments and voluntarily reducing the amount of outlier payments received by Tenet. Fetter focused on mending and rebuilding relationships with its clients, its workers, and the federal government. These efforts involved coming to agreements with two unions in California—Service Employees International Union and the American Federation of State, County and Municipal Employees—and getting regulatory approval for Tenet hospitals to provide managed-care discounts to uninsured patients. Fetter also oversaw the realignment of Tenet's 114 hospitals into two divisions and made plans to sell more than a dozen of them. Fetter's return to Tenet was interpreted as a sign that the company was seriously intent on changing.
In May 2003 Fetter's longtime boss and mentor Barbakow finally succumbed to pressure and stepped down from his position as chairman and CEO; Fetter assumed an acting role as head of the company. Although the intent had been for Fetter to hold the position only until Tenet found a replacement, he was named permanent CEO in September. His appointment was praised by company insiders. In an interview with Galloro for Modern Healthcare , Tenet's nonexecutive chairman Edward Kangas noted, "Trevor has taken the lead in changing the culture and the mentality of Tenet in very short order" (September 22, 2003).
Industry analysts, however, questioned Fetter's appointment, seeing it as a possible continuation of Tenet's questionable corporate philosophies. In addition, many believed that the appointment of someone from outside the company would have improved Tenet's standing in negotiation with the federal government. While many conceded that Fetter's inside knowledge of the company would allow him to make changes faster than an outsider could, the industry analyst Lori Price said in Modern Healthcare , "I personally believe that that plus is more than outweighed by the potential downside of having someone viewed as an insider to settle investigations and go through all that other stuff" (September 22, 2003).
Fetter continued to focus on reestablishing Tenet's adherence to compliance issues with government programs such as Medicare. He stressed cost cutting, asking Tenet administrators to trim approximately $350 million from annual expenses in order to improve corporate efficiency without affecting patient care or safety. He also decided to focus on Tenet's core markets and identified 14 hospitals that were to be put up for sale or consolidated. By September 2003 the company had sold 10 of the hospitals, with gross proceeds estimated at $738 million, and closed two others.
To help improve the quality of services provided by Tenet's hospitals, Fetter created the position of senior vice president of clinical quality and hired a nationally recognized authority on quality of care and patient safety to assume the post. He also launched a company-wide strategy designed to improve overall quality, control, and productivity at Tenet hospitals. As reported in Business Wire , Fetter noted, "I believe there is only one sustainable strategy for health care providers, and that is a relentless emphasis on quality" (July 23, 2003).
Industry analysts noted that Fetter was a strategic thinker and a hands-on leader who was known for his integrity. Fetter said that he did not follow management theories focusing on the big picture, but rather looked to specific facts and experiences to help with his decision-making process. Fetter said that he became a more demanding manager thanks to his time building a solid company from the ground up at Broadlane. He stressed having a lean and cohesive management team as the way for a company to accomplish its goals.
If there was one belief to which Fetter strictly adhered in terms of management style, it was that overconfidence in the top echelons of management is the downfall of many companies. As he told Galloro in Modern Healthcare , "The most dangerous attribute for any company is hubris" (September 22, 2003).
In January 2004 Fetter announced Tenet's intention to sell 27 more hospitals by the end of the year, which Fetter estimated would lead to net proceeds of about $600 million. These sales came about largely in response to fourth-quarter earnings that were significantly below the 11 cents per share analysts had expected. Furthermore, Tenet was expected to do no more than break even in 2004. Fetter told Andrew Pollack in an interview for the International Herald Tribune , "By getting smaller, we will be able to accelerate the time it takes for a turnaround" (January 29, 2004); Fetter and the company clearly stated that a return to typical industry profit margins would take several years. In the meantime, the investigations into Tenet by the federal government remained ongoing.
See also entry on Tenet Healthcare Corporation in International Directory of Company Histories .
Abelson, Reed, "Tenet Healthcare Names Chief," New York Times , September 17, 2003.
"Correcting and Replacing: Trevor Fetter Named Tenet's Chief Executive Officer," Business Wire , September 16, 2003, p. 6085.
Galloro, Vince, "Extreme Makover: Tenet's President Hopes to Restore Company's Reputation," Modern Healthcare , May 12, 2003, p. 8.
——, "It's an Inside Job," Modern Healthcare , September 22, 2003, p. 6.
——, "Strong Tenets," Modern Healthcare , June 2, 2003, p. 32.
Pollack, Andrew, "Tenet Struggles for Turnaround Firm to Sell 27 Hospitals as Earnings Fall below Expectations," International Herald Tribune , January 29, 2004.
"Tenet Announces New Initiatives and Leadership to Enhance Clinical Quality and Nursing," Business Wire , July 23, 2003, p. 5154.