Supersizing CHS

Feb 06, 2014 at 12:00 am by Staff

HMA acquisition complete, nation’s largest chain of hospitals scoops forwardDespite staunch opposition from various circles, Community Health Systems (NYSE: CHS) easily sealed its $3.9 billion acquisition of Naples, Fla.-based Health Management Associates (NYSE: HMA) three days shy of six months.  On Jan. 27, trading of HMA stock ceased at $10.50 per share, with HMA stockholders also receiving .06942 shares of CHS stock for every HMA stock.  Among concerned parties, the American Federation of Teachers (AFT) criticized the CHS-HMA transaction, saying the deal has “apparent conflicts of interest” and “also has complications” related to Department of Justice (DOJ) investigations at both for-profit hospital operators. One probe: alleged Medicare fraud related to admissions practices. The AFT’s interest emerged from its role in managing $1 trillion in public pension plans, with a portfolio including $68 million and $34 million, respectively, in CHS and HMA stock.  Nurses also expressed worries. On the morning HMA shareholders voted on the pending deal needing 70 percent approval, RNs challenged the CHS buyout of HMA, saying the massive hospital monopoly of 206 mostly rural-based hospitals in 44 states would threaten patient access and quality of care. RNs from West Virginia, Ohio, California, Pennsylvania and Florida represented National Nurses United (NNU), the largest U.S. organization of nurses, at a press conference before the shareholders meeting at HMA headquarters in Naples. Months earlier, NNU had filed a formal complaint with the Federal Trade Commission (FTC), noting “vigilant antitrust oversight is essential to prevent the predictable ills of an irreversible market consolidation” that would threaten patients and the public interest. “The deliberate practice of setting these disgracefully high charges, especially in communities where patients and families have nowhere else to go for hospital care, CHS and HMA are exposing countless numbers of people to financial ruin – or discouraging them from seeking care when they need it due to the cost,” said NNU co-president Jean Ross, RN, pointing out that CHS-affiliated hospitals are the sole provider of healthcare services in more than 55 percent of markets served. “This is exactly why the merger, which would give these irresponsible hospital executives even more monopoly clout, should be stopped.”HMA shareholders weren’t swayed; the pending deal garnered 82 percent approval. The FTC approved the acquisition after the Franklin, Tenn.-based company agreed to divest two acute care facilities: Riverview Regional Medical Center, a 281-bed hospital in Gadsden, Ala., and Carolina Pines Regional Medical Center, a 116-bed hospital in Hartsville, SC. “This transaction provides us with increased scale and broader geographic reach as we work to create strong healthcare networks across the nation,” said CHS CEO Wayne T. Smith. “Our larger organization is well positioned to address the changing dynamics in our industry and dedicated to providing quality care for millions of patients and all the communities we serve.”

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