A major investment group has called for the ouster of HCA Healthcare board member Charles Holliday Jr. over failing to properly oversee admission practices.
The letter, dated April 1, calls out Holliday and seeks his removal as the audit and compliance committee chairman on the hospital chain’s board. CtW Investment Group, an activist investor group that has the backing of union-sponsored pension funds, is worried excess admissions could open the system up to federal investigation and penalties.
The group had called out irregular patterns of Medicare emergency admissions in an earlier letter to HCA in October.
CtW said HCA has for several years experienced Medicare ER admissions “well-above the national average, growing over time and not explained by patient case-mix (age, sex, principal diagnosis and urban/rural status).”
These outlier rates could be an indicator of aggressive or improper admission billing practices, the group said in its latest letter.
CtW calculates that since 2009, these excessive admissions could have yielded HCA about $1.6 billion in Medicare payments, amounting to nearly 8% of the chain’s net income from 2009 to 2018.
When CtW warned HCA’s board in October, it expected that Holliday and other directors would review the issue.
“Unfortunately, we heard nothing from the company for over five months,” the April 1 letter from CtW said. “As the 2020 annual meeting approached, we decided to make our letter public in the hope of stimulating some response from HCA’s board.”
HCA claimed it left voicemails for the investment group on Nov. 30 and Dec. 3, but CtW wrote that it didn’t get any messages or an email responding to the allegations.
CtW wants a change at the audit and compliance committee because it has identified other instances where a for-profit hospital chain had similarly excessive ER admission rates. The group points to federal investigations in 2011 and 2012 into Community Health Systems and Health Management Associates over similar allegations.
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“HCA’s rate of excess Medicare emergency admissions has clearly reached the level at which CHS and HMA began to receive regulatory scrutiny,” the letter said.
HCA did not immediately return a request for comment on the letter.
However, HCA wrote a letter on March 8 to CtW that it reviewed the allegations and "found nothing to suggest that ER or medical-staff physicians admit patients to our hospitals based upon anything other than their independent medical judgment. None of our contractual arrangements with physicians incentivize them to admit patients to our hospitals."
HCA's letter added that independent organizations called quarterly improvement organizations reviewed the chain's admissions and "all were found to be appropriate."
It remains unclear whether major shareholders in HCA will agree to the vote. T. Rowe Price, the largest shareholder in HCA, did not return a request for comment as of press time. HCA is expected to have a stockholder meeting April 28.