Health Management Associates fired its entire board of directors, after a hedge fund that owns 14.6 percent of the Florida-based for-profit hospital operator on Monday voted to replace all eight members, Reuters reported.
Glenview Capital Management is the largest shareholder of HMA, which operates 71 hospitals in 15 states with approximately 10,500 total beds. The hedge fund plans to bring in its own directors sometime this week, according to the Knoxville News Sentinel.
The move to fire HMA's board was deemed a "stunning and serious event" by CRT Capital Group analyst Sheryl Skolnick, who also said the present board members may not surrender their seats without a fight, Reuters noted.
After Glenview told the hospital operator it secured a majority shareholder vote to replace the board, HMA said in a statement it would have an independent inspector of election review and certify the validity of Glenview's consents. "The HMA board is committed to ensuring an orderly transition if the written consents delivered by Glenview are validated by the independent inspector of election," the hospital operator said.
With a 9.6 percent stake, Glenview also is the largest shareholder Community Health Systems, which last week agreed to buy HMA for $3.6 billion in cash and stock. Despite HMA's board shakeup, Community Health said it will move forward with the plan and will work with the new board of directors to complete the deal, the Sentinel noted.
However, Glenview said it's not ready to approve the transaction and will consider Community Health's proposal once the new board takes the helm, according to Reuters.
HMA is no stranger to the hot seat, facing allegations of excess admissions. Thanks in part to a 60 Minutes exposé accusing HMA of overly admitted patients from the emergency department, as well as setting admission quotas for its emergency physicians to boost Medicare reimbursements, the hospital operator earned a spot on FierceHealthcare's healthcare naughty list.
For more:
- here's the Knoxville News Sentinel article
- read the Reuters article
- check out the HMA statement