A Naples-based hospital operator's stock took a hit Monday, a day after an investigative "60 Minutes" report questioned its admission practices.
In the segment, several former employees accused Health Management Associates Inc. of pressuring doctors into admitting patients, regardless of their medical needs, to boost revenues.
Company shares closed at $7.50 Monday, down 45 cents on the New York Stock Exchange. The volume of trades spiked.
HMA has denied the allegations, saying the segment that aired Sunday was prompted by disgruntled former employees who want to embarrass the hospital chain and are out for financial gain. Several of the critics who appeared on camera were fired and are involved in lawsuits with the local company.
HMA has 70 hospitals in 15 states, which locally include Physicians Regional — Pine Ridge and Physicians Regional — Collier.
Sheryl Skolnick, with CRT Capital Group LLC, was the only analyst to downgrade the company's stock Monday. She changed her rating from fairly valued to sell, lowering her price target to $6.50 and describing the "60 Minutes" investigation as both scathing and robust in a research note.
"I believe the risk profile has increased pretty significantly, if not dramatically," she said in a phone interview.
Skolnick — who has been an outspoken critic of HMA — said she was troubled by what she saw as devastating allegations on the watchdog CBS show and that the problems at HMA appeared more widespread and systemic than she imagined.
Other analysts didn't budge on their ratings. Leerink Swann & Co., for example, maintained its outperform rating on HMA's stock, showing its confidence that the company's shares will do better than the overall market over the coming year. Meanwhile, analysts at UBS kept their "buy" rating, with a price target of $11 on the stock, and analysts at Lazard Capital Markets reinforced their "neutral" rating, according to an online report by Daily Political.
Based on the "60 Minutes" show and other compelling evidence, including her own detailed analysis of Medicare data, Skolnick believes there is a risk of more intensified involvement from the U.S. Department of Justice.
Ongoing government investigations are looking at whether the company's use of Pro-Med software led to unnecessary emergency room tests and admissions, and overbilling at its hospitals, according to court records and company filings with the U.S. Securities and Exchange Commission. The company has stopped using the software.
In a research note, analyst A.J. Rice with UBS Investment Research said real evidence of a systemic problem at HMA hospitals is still lacking.
"As the '60 Minutes' report itself noted, people speak highly of HMA's quality of care," he wrote. "In fact, as HMA notes, its facilities have been cited numerous times for having excellent quality results on objective third-party measures."