Tenet chief resigns; company on the ropes for back taxes

Shareholders help open door for Jeffrey Barbakow's exit; new CEO could face a $269 million bill from the IRS.

By Katherine Vogt, AMNews staff. June 16, 2003.

Tenet Healthcare Corp. chief executive officer Jeffrey C. Barbakow has resigned amid calls for new leadership from shareholders worried about the troubled hospital chain's future.

Barbakow, who led the company for 10 years, resigned May 27 by mutual agreement with the board of directors, the company said. He will remain chair until Tenet's annual shareholder meeting in July. Trevor Fetter, Tenet's president, was named acting chief executive while the board searches for a replacement.

The move marks one more step in a corporate overhaul at the nation's second-largest for-profit hospital chain as it tries to recover from a series of woes including a federal investigation of its Medicare billing practices and an Internal Revenue Service ruling that could force Tenet to pay $269 million in back taxes and interest.

Barbakow on April 8 already had announced he would step down as board chair as part of a shakeup that led to the replacement of one-third of Tenet's board.

Tenet executives say the leadership change is one of several steps the company has taken to improve its corporate governance.

"The company is very different today than it was seven months ago," said Tenet spokesman Steven Campanini. "The management team together with the board are taking definitive steps in order to right Tenet and this is just another step."

Analysts are divided about whether the leadership change is enough to reposition Tenet for recovery. Critics say it's a step in the right direction.