Dallas-based Tenet Healthcare expects a 20% reduction in ACA exchange enrollment this year with the expiration of enhanced premium tax credits set to pressure hospital earnings and payer mix.
The company is projecting adjusted EBITDA of up to $4.8 billion in 2026, with up to $2.6 billion of that stemming from its hospital business. Last year, Tenet reported $4.6 billion in adjusted EBITDA, compared to $4 billion in 2024.
“Our plans reflect the headwind associated with the expiration of the enhanced premium tax credits on the exchange marketplace,” Tenet Chair and CEO Saum Sutaria, MD, said Feb. 11 during the company’s fourth quarter earnings call. “We continue to closely monitor enrollment levels as well as the potential off-ramps for individuals to obtain coverage through a lower medal tier commercial plans or other options.”
Tenet is assuming a 20% reduction in overall ACA enrollment — which is on the higher end of expectations by some of its for-profit competitors — given its significant exposure in states such as Arizona, Michigan and California.
“We recognize the uncertainty regarding effectuation rates as individuals make determinations if they can afford their premiums and the resultant expected increase in uninsured rates and have conservatively taken these matters into our initial guidance,” Dr. Sutaria said.
Sun Park, executive vice president and CFO, said the expiration of the ACA subsidies will result in lower volume growth and a less favorable payer mix for the health system.
“We estimate that this represents a $250 million impact to our 2026 adjusted EBITDA, primarily in the hospital segment,” Mr. Park said. “There are a wide range of potential outcomes here, and we will continue to monitor enrollment levels and effectuation rates. We will also leverage Conifer’s capabilities to assist our patients with their insurance coverage.”
Last month, Tenet entered into a $1.9 billion-dollar deal with Chicago-based CommonSpirit to regain full ownership of Conifer Health Solutions, the health system’s revenue cycle subsidiary.
Mr. Park added that Tenet’s guidance assumes some exchange enrollees may shift to other forms of coverage, including employer-sponsored plans.
“[On] assumptions for people finding alternative plans, including commercial, we’re about 10% to 15% as our internal assumption,” he said. “Now all of that, again, depends on what we’ve seen in Q1 and what run rates we see, but that’s our assumption embedded in our guidance.”
Despite the anticipated ACA enrollment headwinds, Mr. Park said Tenet remains confident in its commercial contracting position.
“We have very positive and successful conversations with payers in general based on Tenet’s overall service lines and what we bring to the table, including USPI as part of the overall package,” he said. “Our commentary on rates is pretty consistent. We see 3% to 5% range from payers. And overall, from a contracting standpoint, we’re virtually contracted in 2026, I would say, high 90s. And then even for ’27, we’re about 80% contracted. So I think we’re in a very good spot.”
