HMA shares fall after critical 60 Minutes piece
WASHINGTON (AP) — Shares of Health Management Associates Inc. traded lower Monday after news program "60 Minutes" broadcast an investigative report criticizing the company's patient admission policies.
THE SPARK: The hospital chain operator previously warned investors that the CBS newsmagazine would air a segment on the company Sunday evening. The program included interviews with six employees who said HMA pressured its emergency room doctors to admit patients for "inpatient" care, regardless of their actual medical needs. Inpatient care is more expensive and can help boost hospital profits.
THE BIG PICTURE: HMA operates 70 hospitals in 15 states, primarily in the Southeastern U.S. Earlier this year HMA former compliance director Paul Meyer sued the company for wrongful termination, and filed a whistleblower lawsuit saying the company improperly admitted Medicare patients. Meyer was among the former company employees who appeared in the 60 minutes segment.
The Naples, Fla.-based chain called the report "inaccurate," and said in a statement Monday that "data demonstrated that admissions rates from the company's emergency rooms were in line with national norms and consistent over a several-year period."
THE ANALYSIS: Citi analyst Gary Taylor maintained a "Buy" rating on the stock Monday, saying that HMA's statistical rates of admission "do not support a theory" that the company has overbilled Medicare for unnecessary care. Taylor has a $9 price target on the stock.
SHARE ACTION: Health Management shares fell 49 cents, or 6.1 percent, to $7.47 in morning trading.