NO LOVE AT THE OKLAHOMA STATE DEPARTMENT OF HEALTH

According to the its spokesperson, Tony Sellars, The Oklahoma State Department of Health has notified contractors for Federally Qualified Health Centers and Oklahoma Child Abuse Prevention programs that state funding is ending due to budget constraints. The agency cash crunch will result in approximately 250 layoffs, mostly happening at county health departments located in communities across the state. The situation remains fluid.

Sellars is quoted as saying that it’s not entirely clear how the funding shortfall occurred, but he says it’s unrelated to budget cuts as a result of declining legislation appropriations. He further claims that the agency has asked the state auditor’s office to conduct a special audit to examine its financial status.

Twenty-five contracts and nine contractors will be affected by the decision. The total amount of savings for the agency is expected to be more than $3 million dollars. FQHC contracts provided for reimbursement of medical expenses not covered by insurance or other funding. OCAP contractors provided home visitation programs in several regions throughout the state. The agency is continuing to evaluate additional cost cutting measures. A furlough for all employees making over $35,000 that will require one furlough day per two-week period starting October 29 had previously been announced.

This is the type of government balderdash that makes me crazy. The spokesman is clearly attempting to give the legislature a pass even though they reduced the budget. Claiming that there might be irregularities in their finances is tantamount to suggesting fraud or malfeasance. One does not make a $10 million dollar mistake without someone noticing the error. But, since this is a government agency, there is another possibility – this is a pressure play on taxpayers and the legislature since child abuse prevention programs are involved. Then there is the cigarette tax which was struck down as unconstitutional by the state Supreme Court and the backroom negotiations on replacing anticipated funds. We will continue to watch the situation to see if anything really happens.

NO LOVE AT TENET HEALTHCARE (UpdateD)

(January 9, 2018) It appears that Tenet is planning to lay off 2,000 workers, up from the 1,300 positions it said it originally planned to cut. The goal is to reduce annual costs by $250 million, $100 million more than originally publicized. 

Original Post ...

Tenet has filed an SEC 8K (Report of unscheduled material events or corporate change) in which “the Company anticipates eliminating approximately 1,300 positions, including contractors” as part of a $150 million cost reduction initiative. The cost reductions will be “comprised primarily of headcount reductions and the renegotiation of contracts with suppliers and vendors.” Approximately 75 percent of the savings are expected to be achieved through actions within the Company’s Hospital Operations and other segments, including the elimination of a regional management layer and streamlining corporate overhead and centralized support functions. Tenet also expects to realize savings from actions within the Company’s Ambulatory Care and Conifer business segments.

The company has posted a $366 million net loss from continuing operations (for the Third Quarter of 2017) The reasons for the shortfall include “lower revenues and higher expenses related to Hurricanes Harvey and Irma and $10 million of lower-than-anticipated revenues from the Texas Medicaid Waiver and Florida Medicaid programs.”

Management changes continue and a new well-credentialed, well-experienced, high-powered Board member, James Bierman, joins the team. 

AM I NEXT? NO LOVE AT ELON MUSK'S COMPANIES (UPDATE)

There is little doubt in anyone’s mind that layoffs involve internal and external conditions beyond an individual employee’s control, where firings are the result of an individual’s performance or behavior.

So one wonders why Tesla is continuing to claim that it has fired an estimated thousand-plus employees after a company-wide performance review?

Does anyone believe that a smart person like Elon Musk and his supercharged executives who revel in their stringent hiring criteria has made the same mistake over one thousand times?

Or is something else going on, something that Tesla wants to hide from their creditors, vendors, investors, potential investors, customers, potential customers, the media, and the public? Something existential or simply bad news.

There are a number of published reports suggesting that a portion of Tesla is burdened with crushing debt, overly relies on government subsidies, has possibly taken on a vision that outstrips their ability to execute, or that they will be unable to produce a profit for a longer period than originally anticipated.

What makes the characterization of Tesla’s reduction-in-force activities suspicious is that Tesla is claiming that these were firings due to a company-wide performance review and not layoffs. However, a number of the affected employees were blind-sided by their termination, suggesting that those who were terminated were not subject to the normal and customary warnings, probation, and termination procedures. Most underperforming or ill-behaved employees usually know they are about to be terminated, so there rarely is an element of complete surprise. Especially if the malfeasant behavior is well-documented.

So what’s the story?

• Is Tesla simply reducing its run rate to make its numbers look better for its investors and creditors?

• Does this move presage a major and necessary new capital raise – possibly from Chinese investors?

• Is Tesla attempting to mitigate unemployment-associated costs that may accrue by labeling the reduction in force as layoffs?  

• Is Tesla trying to eliminate union organizers and activists among the chaff or a larger firing event that would mask inappropriate or illegal activity that may violate federal or state labor laws?

What is being reported …

• Tesla is behind in the production of their lower-priced electric vehicle known as the Model 3 Sedan.

• There are problems associated with its Advanced Autopilot software and hardware subsystems.

• With the exception of Space-X, Tesla is not generally thought to be profitable.

• The reasoning behind the 2016 acquisition of the unprofitable SolarCity (founded by Musk’s cousins) and its crushing debt for an estimated $2.6 BILLION has never been adequately explained.

• Tesla is seeking additional capital to build a Chinese mega-factory (and apparently willing to pay a 25% tariff to avoid technology transfer to the Chinese).

• Look for lawyers to be involved as individuals demand their performance reviews and potentially bring “wrongful termination” lawsuits.

• Look for the unions to capitalize on these firings to sell their message of “employee protection” against a heartless management.

It is hoped that Elon Musk will provide some answers to the investment community in his November 1, 2017, quarterly earnings call.

Let’s hope that the remaining Tesla employees are not distracted by the potential of a surprise announcement of their termination – and who may be planning to leave the company to seek stability elsewhere. Companies like Tesla must continually raise capital and grow, even if they are not profitable, or the weight of the chickens coming home to roost may sink the company.

UPDATE (10/28/2017)

I found a great article titled "Tesla is immune to bad news — here's why" which explains why Tesla apparently is not held to account like other companies.

• "Tesla has reliably produced an endless stream of bad news during the last year.

• Investors haven't cared, or haven't cared for long.

• That pattern will probably continue, short of Tesla threatening bankruptcy."

Well worth reading.

“By now, investors are so used to the wild stock swings, the consistent nosebleed losses, the eye-watering cash burn, and the frequent sexy news announcements that bad news is dynamically priced into their positions.

In truth, bankruptcy might be the only bad news that markets have refused to price in for Tesla. The company has been able to raise cash through equity and debt on a whim, but it still only has enough money in the bank to operate for about a year.

The bottom line for Tesla, of course, is that bad news is irrelevant, while good news is a buying opportunity.”

Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?