Updated with a response from HCA Healthcare
An investment group managing the pension funds of major labor union workers has filed a Securities and Exchange Commission (SEC) complaint against HCA Healthcare alleging the hospital chain is misleading investors with high emergency department admissions that could trigger enforcement action by Medicare regulators.
Filed Thursday, the Strategic Organizing Center Investment Group's (SOC IG's) complaint points to several statements HCA made to its investors since 2014 characterizing emergency departments as a driver of higher hospital admissions and, subsequently, higher earnings.
HCA has also outlined initiatives and investments to increase the capacity of its emergency departments, the investment group wrote to the SEC.
The complaint cites Medicare data indicating that the company has “admitted a much higher percentage of emergency department patients” than the national average, and more than can be explained by geography and diagnoses, the group wrote.
The danger of these practices, the group said, is that Medicare regulators have previously targeted high emergency department admissions as “as a potential indicator of improper practices” resulting in regulatory enforcement.
Specifically, two other publicly traded hospital companies, Community Health Systems and Health Management Associates, have seen enforcement following investigation into their high emergency department admissions.
Despite this, HCA has not appropriately disclosed the material risks related to this potential enforcement to its investors, the group wrote.
“We are calling on the SEC to investigate HCA Healthcare to ascertain whether HCA’s statements about their emergency admissions are misleading because they fail to disclose HCA’s outlier status and the risks such status entails,” Dieter Waizenegger of SOC Investment Group said in a statement. “HCA’s aggressive ER admissions practices and general lack of transparency raise grave concerns about the company’s long-term reputation and success.”
One physician staffing provider that worked with Health Management Associates, EmCare, was implicated and fined nearly $30 million in 2017 for practices related to the system’s emergency department practices. HCA has been in a joint venture agreement with EmCare since 2011, SOC IG wrote, but has not appropriately detailed the arrangement and its potential risks to investors.
“We believe that EmCare [and parent company] Envision’s relationship with HCA, including the enforcement action and settlement, should have been and should be disclosed in much greater detail by HCA.”
SOC IG works with the pension funds of the Strategic Organizing Center’s members, which include major labor unions representing over 4 million workers. Those funds have more than $250 billion in assets under management and are “substantial” HCA shareholders, according to the complaint.
In an emailed response, an HCA representative said the filing "appears to be a rehash" of similar claims raised in back in 2020.
"We took their concerns seriously and we analyzed the data and our procedures," the representative wrote in an email. "We remain confident in our processes and robust audit systems. In addition to our internal reviews, independent third-party audits provide additional confidence in our compliance with regulatory requirements."
The new filing follows a more recent February report (PDF) from Service Employees International Union (SEIU), an SOC coalition member, highlighting HCA’s high emergency department numbers and alleging Medicare fraud.
“HCA routinely admits patients for inpatient hospital stays apparently regardless of medical need, as shown by SEIU analysis of Medicare data and several unrefuted lawsuits filed against the HCA,” the labor group wrote in the report. “This analysis … indicates that HCA’s practice of over admitting patients may have brought the company nearly $2 billion in excess Medicare payments since 2008.”
HCA is among the country’s largest health systems in the country with 175 hospitals across 19 states. The for-profit reported 2021 revenues of $58.75 billion and about $7 billion in net income.