The proposed deal with Community Health Systems Inc. has gotten the nod from two separate boards at Health Management Associates Inc. — and that's part of what has prompted a union to register “deep concerns” about the proposal.
"We believe this acquisition disadvantages shareholders, as well as patients and communities served by CHS and HMA hospitals," Randi Weingarten, president of the American Federation of Teachers, wrote in a Dec. 3 letter. "The consequences of the proposed acquisition are further complicated by serious conflicts of interest, potential self-dealing, and possible violations of applicable law arising from Glenview Capital's ownership stake in both companies."
Glenview instigated HMA shareholders' decision to remove and replace the entire board, which happened shortly after the original board set the CHS deal in motion. According to the letter, AFT represents 2,000 employees in the company workforces and shareholders with more than $1 trillion in pension fund assets.
HMA, based in Florida, currently operates 71 hospitals in 15 states, including three local facilities: Carlisle Regional Medical Center, Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center.
Weingarten also noted concerns about "CHS management's layoffs of registered nurses and other critical staff, and attempts to impose nurse rationing and gag orders on nurses at CHS hospitals."
In response, CHS Executive Vice President and General Counsel Rachel Seifert said the company "deeply values the registered nurses represented by AFT" and is working collaboratively with them to benefit everyone.
As for the deal, Siefert said it was negotiated at arms' length between the management teams and boards of both companies and "Glenview Capital Management had no role whatsoever in negotiating the terms."
"We do not believe, and do not believe a court would find, that Glenview is a controlling shareholder," Siefert wrote. "We believe the proposed merger will serve the best interests of all stakeholders. We are confident that any litigation challenging the proposed transaction will be unsuccessful."
The proposal is scheduled for a HMA shareholder vote on Jan. 8, and at least 70 percent approval is required for it to succeed. Final regulatory approval would also be needed.