Stanley Feld MD.FACP,MACE
The HCA drama continues. It also remains a strong opportunity for a “Patient Power” abuse protest and boycott their facilities. The opportunity has presented itself for patients to demand Price Transparency and control of their own healthcare dollar
Neither HCA nor United Healthcare is looking out for the patients’ interest. They are looking out for their bottom line.
850,000 patient lost coverage in HCA hospitals in the Denver area. Patients fled to other Denver area hospitals. Their physicians also fled from HCA. Their physicians applied for rapid admitting and surgical privileges in other hospitals to HCA’s surprise. HCA also increased the fees in Florida and Las Vegas.
The State Board of Insurance upheld United Healthcare’s right to place HCA hospitals out of network after an HCA protest. “The Colorado Division of Insurance said Wednesday that United Healthcare did not violate state insurance regulations by failing to get consent from customers before limiting access to hospitals operated by HCA Inc.” Notice the power of the Colorado Division of Insurance. The Colorado gubernatorial candidates were serious about healthcare reform for the people of the Colorado; they should step up and pledge to use the power of the state agencies to clean up healthcare.
Immediately after the Insurance Board’s ruling United Healthcare sued HCA Inc.
“United HealthCare has sued HCA Inc. over what it sees as hardball negotiating tactics in an important Western market, upping the ante in a bitter fight over rates there.”
“United, the nation’s No. 2 health insurer, asked a Colorado judge Monday to bar HCA from engaging in anti-competitive behavior that it says is eroding its business in the Denver area”.
United Healthcare claims “The tactics “cause irreparable damage to United’s reputation and customer goodwill, which United has built over several decades,”
“The Nashville hospital chain has barred United Healthcare nurses from contacting patients in HCA facilities, charged higher rates for mammograms, and encouraged companies to switch insurance providers — all in an effort to increase its leverage at the bargaining table, United says in the suit.”
These lawsuits are going to cost United Healthcare and HCA a lot of money. These costs are certain to be translated into increased insurance rates. The result will be more uninsured people in the State of Colorado. It is an opportunity for true leadership and real healthcare reform.
It dawned on me what HCA might be doing. HCA is facing lawsuits from its stockholders over the leveraged buy out terms. The suits accuse that HCA was sold for too little money. $51 a share was much too little to pay for a company worth at least $58.60 per share. The stock was selling at $49 a share at the time of the buyout. HCA has also limited counter offers by placing a short time limit on bids.
“Shareholders upset with sale price HCA Inc. and a group of private investors who want to buy it deny claims by some upset shareholders that they’re cheating stockholders out of millions of dollars in potential profits from the multibillion-dollar deal that could close later this year.’
“Six shareholder lawsuits were filed soon after the July 24 announcement that HCA’s board had agreed to sell the company in a leveraged buyout to a group of three private equity firms and Frist family members, including HCA co-founder Thomas Frist Jr.”
“The cases, brought by institutional and individual investors, were consolidated, and Pirelli Armstrong Tire Corporation Retiree Medical Benefits Trust was named last month as lead plaintiff.”
“The lawsuits argue the price is “grossly inadequate.” The offer is well below the company’s record high price of $58.60 a share on June 22, 2005.”
In my opinion, something is wrong with the price paid in the leveraged buyout. In order to protect itself from a stockholder class action lawsuit, I suspect KKR and HCA figured they could trade one lawsuit for another. They devalued the shares to a level much below the sale price as a result of their failure in to successfully negotiate with United Healthcare.
On September 19, the “Buyers: HCA still attractive, stock iffy”
“Three private equity firms painted a dreary picture of HCA Inc.’s short-term prospects even as they tried to convince its board to sell the company and take it private, the latest regulatory filings outlining details of HCA’s pending $33 billion sale show.
Shares of Nashville-based HCA were trading in the mid-$40 range this summer when the trio of equity firms warned that the hospital company’s stock price was likely to fall to the high-$30 range and stay there for several years because of the stock market’s concerns over issues such as sluggish patient volumes and escalating bad debt.”
Could it be the buyers wanted to depress the stock’s value to get the stockholders lawsuit off their back? If so, it might backfire on them. They might also lose their loan commitment. The banks have committed themselves to a $25 billion dollar loan, when the stock price was $49. Medicare is pledging to change the DRG system to lower payments to hospitals. The old DRG system has been so lucrative for the hospital systems bottom line in the past.
The stockholder suit could vanish since the stock price sank and their argument evaporated. Then HCA could negotiate a mutually acceptable price increase with United Healthcare. The United Healthcare suit might vanish with a contract settlement. The result could be an increase in the stock price well beyond $51 per share
Think about what might be going on here. Is this for the good of improved cost efficient patient care? Who has to say something? We do! We have not heard a word from the elected officials or any candidates. It is our job to demand action.