(By Balachander) Health Net Inc. (NYSE: HNT) said it has terminated agreements with all six of Tenet Healthcare's Southern California hospitals.
Health Net said Tenet Healthcare has refused its requests to negotiate a new contract that more accurately reflects current statewide market conditions.
In recent discussions for a new contract, the companies have been unsuccessful in reaching agreement on reimbursement amounts, Health Net said.
The companies were nearing the end of a three-year contract.
Health Net said Tenet's reimbursement should be in line with the medical consumer price index, which currently averages more than 3 percent, and that reimbursement for state- and federally funded programs like Medi-Cal needs to be consistent with the funding for those programs.
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The terminations were effective midnight on Dec. 21, 2012.
Health Net said its subsidiaries exercised their contractual option to terminate agreements with all six of Tenet Healthcare's Southern California hospitals.
The facilities are: Desert Regional Medical Center, Fountain Valley Hospital and Medical Center, John F. Kennedy Memorial Hospital, Lakewood Regional Medical Center, Los Alamitos Medical Center and Placentia Linda Hospital
HNT shares, which have been trading in the 52-week range of $16.65 to $41.22, traded 1.45 percent lower at $24.45 on Thursday.