The decision by Health Management Associates shareholders to approve a purchase offer by Community Health Systems should have surprised no one (P&I Daily, Jan. 8, and Pensions & Investments, Dec. 6). It certainly came as no surprise to the American Federation of Teachers.
When we first raised concerns about the purchase in early December, we were not naive enough to believe that our warnings would be taken seriously. And unfortunately they were not which is why nurses posed similar questions to the HMA board members during the Jan. 8 shareholders meeting in Naples, Fla. Neither action stopped the merger agreement or the generous golden parachute bonuses that were part of the proposed deal.
As a 1.5 million-member organization that represents 2,000 employees of HMA and CHS, and that represents members and retirees who are shareholders with more than $1 trillion in pension fund assets including significant stakes in both HMA and CHS we felt it was our duty and obligation to urge caution about this questionable transaction.
We remain concerned about the role played by hedge fund Glenview Capital in the merger. As the largest shareholder in both CHS and HMA before the merger, serious questions remain about the extent to which Glenview was aware of, influenced or directly participated in the acquisition.
Our concerns about the merger have been well documented. Like HMA, Tennessee-based CHS is facing a Department of Justice probe and lawsuit alleging Medicare fraud. How can HMA rehabilitate its reputation and shareholder value by merging with a company that is facing the same kind of scrutiny and questions?
As the old adage says, you are judged by the company you keep. The vote may be over, but troubling questions about the deal linger.
President, American Federation of Teachers