Hoag Kicks Off a Capital Campaign for Its Planned Women’s Center
Santa Barbara-based Tenet Healthcare Corp., Orange County’s largest hospital operator, may have dodged a possible showdown with an influential shareholder at its annual meeting last week in Beverly Hills. Tenet, the country’s No. 2 hospital chain, owns nine facilities in OC.
The California Public Employees’ Retirement System, after meeting with top Tenet officials, decided late last week to support a slate of directors nominated by management. CalPERS previously intended to support a slate of board candidates nominated by the Tenet Shareholder Committee, a dissident group. CalPERS owns approximately 1.8 million shares of Tenet stock valued around $69.3 million as of late last week.
To be sure, CalPERS isn’t Tenet’s biggest institutional investor, at about 1%. But it is the largest public pension fund in the U.S., managing $177 billion in investments. It’s also known for its persuasive involvement in corporate governance issues.
CalPERS’ Web site reported that the pension fund’s representatives received a verbal commitment that Tenet’s board will create a committee to study governance issues and provide a comprehensive report to its shareholders.
CalPERS also said Tenet, among other things, publicly committed to name two independent directors to the board within the next 12 months.
“We felt after the meeting that we would support management,” said Brad Pacheco, a CalPERS spokesman.
Tenet spokesman Harry Anderson said the company was “pleased and grateful” about CalPERS’ decision. CalPERS representatives met with Tenet Chairman and Chief Executive Jeffrey Barbakow and Stephen Farber, the hospital operator’s general counsel.
The Tenet Shareholder Committee, led by M. Lee Pearce, a Miami Beach physician and businessman, has alleged that Tenet’s board pays Barbakow too much money,$3.1 million total compensation in fiscal 2000. It has also alleged that the healthcare company’s managers haven’t done enough to improve the chain’s profitability.
In an earlier interview, Pacheco said CalPERS had supported the dissident board slate for several reasons, including the committee’s proposal for one-year board terms, instead of their current three-year terms. Pacheco said one-year terms allow directors to be held accountable for their actions.
Late last month, Barbakow issued a news release acknowledging the historic position of CalPERS and Institutional Shareholder Services on corporate governance matters.
“We will continue this dialogue with our shareholders about governance concerns,” Barbakow said. “But we urge these groups to focus on what we believe are the true issues in this election: Tenet’s improved financial performance and the personal agenda of M. Lee Pearce.”
Tenet officials have alleged in other published reports that Pearce’s “track record of litigation and competition” with Tenet renders his ability to act independently in the best interest of all shareholders suspect.
Tenet also noted that the American Federation of State, County and Municipal Employees, which holds about 6.5 million Tenet shares in its pension trust and the Proxy Monitor, a proxy research, voting and audition advisor, have endorsed management’s nominees.
Hoag Starts Capital Campaign
Hoag Memorial Hospital Presbyterian, Newport Beach, started a $50 million fund-raising campaign for a planned seven-story women’s pavilion on its campus last week. Hospital officials said the pavilion is the first major expansion on its upper campus in more than 25 years and will double its clinical space.
The pavilion, scheduled to open in 2004, will have 309,000 square feet of space. It will include birthing facilities, an area for high-risk delivery care, an osteoporosis clinic, a continence center, a perimenopausal clinic and the Hoag Breast Care and Imaging Center. Hoag ranked second among Orange County hospitals in net patient revenue in the most recent annual hospital list published by the Business Journal.
Bits and Pieces:
TriZetto Group, Newport Beach, said three existing application service provider customers,the Columbus Clinic, High Country Health Care P.C. and Bicycle Health Benefits Inc.,contracted for expanded products and services … The Pacific Business Group on Health accepted Universal Care, Long Beach, as a participant. San Francisco-based Pacific Business Group on Health is a purchasing coalition that represents more than 3 million people and $3.5 billion in annual healthcare expenditures with major cities, universities and Fortune 500 companies … MedCom USA, Irvine, opened a center to offer application service provider and storage service provider solutions to its clients. MedCom offers technology that helps its users collect, utilize, analyze and disseminate data from payers, providers and patients … GKK Healthcare, Irvine, is designing a 100-bed critical-care facility for Pacifica Hospital of the Valley, Sun Valley. GKK is a medical design and construction services company … Children’s Hospital of Orange County, Orange, said its diabetes center received certified recognition from the American Diabetes Association for self-management education … Mission Hospital Regional Medical Center, Mission Viejo, earned an award from the Joint Commission on Accreditation of Healthcare Organizations for its use of outcomes measurement to achieve healthcare quality improvement. The hospital also added a safe sports guide to the MyHealth2000.com Internet site.
