Investment group urges HCA shareholders to vote against board member over ER admissions

Dive Brief:

  • CtW Investment Group is calling on HCA Healthcare shareholders to vote against the current chairman of the Audit and Compliance Committee, Charles Holliday Jr., for failing to properly oversee emergency room admissions practices. 
  • The group alleges in its Thursday letter to shareholders that HCA’s ER admissions for Medicare members are excessive and well above the national average, which it says is likely to attract federal investigations and could result in lawsuits.   
  • The group alleges the ER admissions mirror those of other systems that resulted in regulatory scrutiny and settlements years earlier. CtW said HCA has not responded to the issues it has raised and the hospital operator did not respond to a request for comment from Healthcare Dive. 

Dive Insight:

CtW sent a letter to HCA in October, urging it to investigate the issue. The demands for changes have gone unanswered, said the group, which advises union pension funds that own about 450,000 shares of HCA, according to its research director.  

The group urged the company to retain an independent billing expert to investigate the admissions and to also examine whether the board or managers benefit financially from aggressive admissions and billing practices. 

The group pointed to HCA competitors that have been embroiled in similar controversies that ultimately resulted in large settlements. 

In 2014, CHS agreed to pay $98.5 million to resolve allegations that it billed the government for inpatient services that should have been billed as outpatient services, according to the U.S. Department of Justice

In 2018, HMA, a former U.S. hospital chain, agreed to pay $260 million to resolve similar claims among others. DOJ said HMA unlawfully pressured physicians “to increase the number of emergency department patient admissions without regard to whether the admissions were medically necessary.” 

CHS acquired HMA after the alleged conduct occurred.   

The investment group said it had previously attempted to warn CHS and HMA of the issues. 

“Unfortunately, in each previous case the board failed to respond to our concerns with appropriate action. In each case, a combination of federal investigations, private litigation, and action by shareholders subsequently led to significant changes within a few years,” the group said in the letter to shareholders sent Thursday.

The investment group has been vocal elsewhere about improving corporate governance. More recently, it urged McDonald’s investors to vote against the severance package for the ousted CEO after he violated company policy.