Health Management Associates, Naples, Fla., questioned the methodology, independence and objectivity of a stock analyst's report challenging the sustainability of the company's profit margins. HMA said UBS analyst Kenneth Weakley made a faulty assumption regarding HMA's managed-care revenue. The company also noted that it dropped UBS as an investment bank because of UBS' former relationship with troubled HealthSouth Corp. and added, "The timing and content of UBS' report raises concerns regarding its independence and objectivity." UBS spokesman William Dentzer said the bank is reviewing the release but "stands behind the objectivity and independence of our analysis."
Weakley said yesterday that HMA's gross charges, or list prices, substantially exceeded those at other investor-owned chains in fiscal 2001, excepting Tenet Healthcare Corp. Increased regulatory scrutiny of gross charges could force HMA to moderate its gross prices, affecting 55% of the company's managed-care contracts, Weakley said. HMA said no more than 24% of its managed-care revenue, or less than 10% of revenue overall, comes from contracts based on a discount off gross prices. Weakley was the first analyst to question the sustainability of Tenet's earnings growth in October 2002, including a report that analyzed the company's much-higher-than-average Medicare outlier payments. HMA owns or operates 52 hospitals in 16 states. -- by Vince Galloro