FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Tenet Healthcare Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: THC)") else Response.Write("(NYSE: THC)") end if %>
3820 State Street
Santa Barbara, CA 93105
(805) 563-7000

UNION CITY, Ca., January 8, 1997/FOOLWIRE/ --- Tenet Healthcare Corp. reported their Q2 results on Tuesday, January 7th. The company is currently in registration for both the shares to be issued in the OrNda exchange and the publicly traded debt they will be issuing. Their comments during the conference call were qualified by reference to the proxy statement and registration statements dealing with those securities.

REVENUES AND EARNINGS. Earnings per share for the quarter were $0.35, a 13% increase from the $0.31 in the prior year and in line with analyst estimates. For the first half, earnings per share of $0.68 increased 15% from $0.59 in the prior year. Net income, before gains on sales in the previous year, increased by 18% to $76.8 million. Revenues increased 8% to $1.476 billion. EBITDA increased by 7% to $292 million.

MARGINS. EBITDA margins were 19.8% compared to 20% in the prior year which was the highest level for any quarter since they have been reporting that number. Their EBITDA margin this quarter is the highest in the past 4 quarters. Operating margins were unchanged at 14% in both years.

Interest expense declined by $11.2 million from last year but equity in income of unconsolidated subsidiaries also declined by $6.4 million, a result of their very successful program last year to monetize non-core assets. As part of that program, in last year's second quarter, they had gains from asset sales of $0.54 per share, primarily from the sale of their equity interest in Hillhaven.

ADMISSIONS AND SAME STORE RESULTS. Total admissions in the quarter were up 3.5%. Same store admissions were up 0.5%, similar to the August quarter. Same store revenue per admission increased 1.3%. This number continues to fluctuate on a quarter-to-quarter basis, but over the last several quarters continues to be essentially flat on a same-store basis. Total outpatient visits increased by a strong 16.4% and same store outpatient visits continued strong, up 11.2%, exactly the same as last quarter. While visits have been increasing rapidly, revenues per visit has been declining slightly due to rapid growth in home health visits. However, the rate of decline is slowing and revenue per visit actually increased slightly from the August quarter, the first sequential increase they have seen since the rapid increase in home health began.

PAYOR MIX SHIFT. There is a long term secular trend to slowly higher Medicare mix and they think the principal reason for that is that they do get small increases in Medicare rates whereas the commercial side of the mix continues to convert to more discounted managed care business. Additionally there are some seasonal factors in their Medicare mix. The first quarter of the year is usually the low point and builds to a peak in the third quarter, their next quarter, and they think a lot of that has to do with Florida in particular where they have some strong seasonality in some of those hospitals. The jump in Medicare in this quarter was a little higher than they might normally expect, but nothing terribly unusual.

MEDICARE PROPOSALS. They don't expect any unusually significant activity with regard to proposed Medicare cuts other than the fact that, in contrast to this year where there was substantial gridlock in Washington, they believe there will be some sort of development of proposals to begin to move on the Medicare issues. Although this year was a particularly good year for their industry from that perspective. They think there will be some consensus building in Washington, and clearly Medicare payment rates will be in play in terms of some point of legislative reduction, but they are not looking at anything overly signficant and are working to find ways to achieve reduction in spending in ways that will be beneficial for agencies -- such as additional privatizing opportunities and reform of managed care programs associated with Medicare beneficiaries. Clearly provider-sponsored networks are in play and they have supported the movement towards that legislation.

CHOICES PROGRAM STATUS IN NEW ORLEANS. The Choices Demonstration Project is a Provider-Sponsored Network so it demonstrates how providers can perform in this direct marketing and full financial accountability structure for both insuring and delivering care. Tenet expects to have their final survey this month. As soon as they get the results they will be ready to begin their marketing activities for the product. They certainly hope that this will be no later than the Spring or early Summer. One of the strategic objectives that the company had in going after this program is that it was a tremendous opportunity to build their skillset as a corporation in being able to effectively manage and market the provider sponsored programs to the Medicare beneficiary. They know what their skillset is and they have great results in their medical management aspects in New Orleans, California, and their other HMO operations and this gives them a great opportunity to learn a lot on the marketing side. They believe this is really their proving ground and development site for the systems they will apply across the rest of the country and the company when the Federal government broadly endorse the whole concept, which there is tremendous support for across the provider industry. At this time the major opposition is from the insurance industry or the insurance industry through the state insurance commission.

THE ORNDA MERGER. The most significant development since their last conference call meeting is the acceleration of the merger timetable. As a result of good experience with the SEC and making significant headway in their efforts to resolve concerns of the FTC, they now plan to close at the end of January rather than March 1st. As they reported previously, in December they received a second request for information from the FTC, limited to the area in and around San Luis Obispo, California on California's Central Coast. Many years ago, AMI was required by the FTC to divest French Hospitals in San Luis Obispo, which is now owned by OrNda. They are in negotiations with the FTC staff and believe they will have an acceptable outcome that will enable them to close the transaction by the end of January. Their proxy statements were mailed to shareholders of both companies in December. The shareholder votes are scheduled for January 28th.

DEBT REFINANCING. The preliminary prospectus for the $1.3 billion debt refinancing will be printed later this week and will be available shortly thereafter. They will be meeting with the rating agencies at the end of this week in connection with the offering. A road show is being planned beginning late next week. Specifics regarding cities and dates are still being finalized. The underwriters in the transaction are Donaldson Lufkin Jenrette, Merrill Lynch, JP Morgan Securities, Goldman Sachs, and Smith Barney.

BANK CREDIT FACILITY. Arrangements for the new bank credit facility are progressing well. They will be meeting with a large group of interested banks on January 8th in Los Angeles. Their bank facility will be a $2.5 billion unsecured revolving credit facility, of which borrowings of approximately $1.4 billion will initially be outstanding, leaving an available line of $1.1 billion. Interest spreads will be narrower than their current line. Their lead banks are JP Morgan, Bank of America, Bank of New York, and Bank of Nova Scotia.

ORNDA BONDS. At the same time, they are tendering for the OrNda 12.25% notes and 11-3/8% notes totalling $525 million, and tender notices have been sent to bond holders. OrNda bond holders who tender will receive accrued interest up to the date of payment, so there is no reason to delay tendering the bond. In fact, on the contrary, they have built in an incentive to tender immediately.

CURRENT SCHEDULE. Subject to sharehold approval and completing an agreement with the FTC, the merger and bank credit facility are now scheduled to close on January 30th. Completion of the bond tender and closing of the public financing should take place on January 31st. The tenders and financings are contingent upon the completion of the merger, but the merger is not contingent on the financing or tender. They have been very pleased with the speed with which all these pieces have come together.

PROGRESS ON COMBINING THE TWO COMPANIES. They began thinking about how they were going to conduct the integration of the two companies well before they made the announcement of the merger and the progress is going along quite well. It is a much simpler process than what they had envisioned and dealt with with the AMI transaction two years ago. At that time they had to create an entirely new structure and move around hundreds of people to accomplish what they needed in terms of a cohesive, well run organization. With regard to the OrNda facilities and where they are located and how they integrate themselves, Tenet believes they will be able to absorb those facilities into their existing structure with the exception of the addition of one new region centered around OrNda's Arizona facilities. By the end of this month, they expect to be able to notify all of the OrNda corporate employees who will remain with the company with regard to what their position will be and where they will be based. All other OrNda employees will also be notified within that period of time as to their determination.

PENETRATION IN KEY MARKETS DUE TO ORNDA MERGER. Two years ago Tenet had 6 hospitals in the greater Los Angeles area. They now have in excess of 30, which will make them by far the largest provider and the only provider with a full geographical presence throughout the Southern California market. They have a good mix of community hospitals as well as strategically placed tertiary facilities. In South Florida they already have a strong system which will only be made stronger by the addition of OrNda's facilities with Parkway, Florida Medical Center, and Coral Gables. In just two years they have come from 3 acute hospitals in this area to a total of 4 which includes 4 open heart programs, trauma center, and other tertiary services, as well as the full range of specialty and ancillary facilities, outpatient, and home health programs.

FINANCIAL ADVANTAGES TO THE DEAL. When they set out to acquire AMI they said they expected about $50 million in first year cost savings. They exceeded that target. They expect about $55 million in annual operating cost savings as a result of the OrNda combination, and that is over and above the interest cost savings. They have left some room for contingencies in this estimate and their recent strength in consolidating AMI gives them a high level of confidence that they will meet or exceed this target. They expect to achieve much of this amount in the very first year. They know from their prior experience that some of the savings come very easily, such as the elimination of duplicate overhead. They expect to be able to reduce bad debt expense by using Tenet's proven systems as they did with AMI. In that case, they reduced bad debt expense at the AMI facilities by more than 100 basis points. OrNda has long been a member of Tenet's buying group so they already have the advantage of the attractive pricing Tenet has been able to generate. This is one of the factors that will quickly simplify the process of consolidating and integrating the two companies. Nevertheless, they do expect some incremental savings to be achieved from increased compliance at the OrNda facilities. Finally, there are a great many savings they can achieve through network consolidation activities such as consolidation and rationalization of duplicate programs and services. These obviously will take a bit longer and will require limited capital investments to generate these larger savings.

OTHER ACQUISITIONS IN PROGRESS AND THEIR STATUS. They expect both North Shores in Miami and Brookside in Northern California to close sometime this month. Desert Hospital in Palm Springs should be in the fourth fiscal quarter, perhaps as early as March. Georgia Baptist is still in the very early stages, but they would be looking at closing perhaps by the end of the fiscal year. They have many other possibilities in the pipeline and the list is growing daily. Activity has clearly accelerated for them, both in terms of prospects and in terms of the very serious prospects they represent.

OBJECTIVES AND PLANS FOR THE COMING YEAR. Their primary objective is to increase the value of shareholder investments. For the past 3 months their share price has been constrained, they believe principally by merger related factors. They expected this and are not overly concerned. They believe it does create an opportunity for fundamental investors. They believe their shares represent very good value today and they intend to do their best to demonstrate consistent growth and performance going forward. Successfully integrating the OrNda hospitals and people into Tenet and their local networks is the highest priority if they are to deliver the results shareholders are looking for. This represents their greatest opportunity in the year ahead, they believe, and they think they are fortunate to have a talented team that has done this before.

EXPANSION PLANS. As they look ahead they have given a lot of thought to what their focus and emphasis should be. In their expansion and acquisition activities, they will continue to place their primary focus on the communities they already do serve, just as they have done this past year. There is still much they can do in those communities. With OrNda's hospitals they are now in a position in some areas to be quite selective as they finish filling out their position with selected key partners or assets. In all their markets, they will be focusing even more on integrating their services and increasing efficiencies.

They are pleased and gratified by how the tax-exempt sector views them as a partner or acquirer. Their selection by Georgia Baptist in Atlanta is just the most recent example. They believe their emphasis on local responsibility, local identity, and decision making at the community level are important factors in that success and they will continue their community emphasis. Capitalizing on this growing success with tax exempt partners is a very high priority for them. They will look at new markets, but on a very selective basis.

Internally, they have many areas of strength and they want to take these to a new level to improve upon them even more. Examples include clinical systems and best practices which improve quality and patient results while at the same time reducing costs. The bottom line is quality outcomes and they come from quality facilities and people with the tools, training, and systems to deliver those quality outcomes. Other examples of defined strengths that they will be improving even more this year are managed care contracting, purchasing, systems, collections, and lab services.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.