HMA shareholders to vote in January on merger with CHS

Health Management Associates has set Jan. 8 as the date of its shareholder meeting to vote on a proposed merger with Community Health Systems. The two companies also revised downward HMA's projected revenue for 2014.

The hospital chain last week said its board of directors unanimously agreed to support Community's $3.9 billion offer. Its largest shareholder, hedge fund Glenview Capital Management, also reversed course to say it would vote its 14.5% holding in favor of the deal.

Community needs approval from 70% of HMA shareholders before it can close the acquisition.

The companies set the date for the shareholder meeting in an amended proxy filing with the Securities and Exchange Commission. The filing also included revised financial projections for 2014 that were below previous estimates from HMA.

The forecast predicts same-hospital revenue growth of 1.5% for the year, instead of 2%, and $100 million in revenue from acquired hospitals instead of $300 million. But analysts called the new estimates more conservative because they did not factor in an incremental impact from the expanded insurance coverage under healthcare reform.

Naples, Fla.-based HMA reported last week earnings that were below expectations, largely because of falling volume. On an earnings call, Interim CEO John Starcher said that 75% of the volume decline came from 16 hospitals, primarily in Florida and Mississippi.

HMA's 10 hospitals in Mississippi have been involved in a high-profile contract dispute with the state's largest insurer, Blue Cross and Blue Shield of Mississippi, which prompted the insurer to drop the hospitals from its network. Starcher said on the call that BCBS has developed narrow networks around service lines such as orthopedics and neurosurgery and is directing patients to four select systems.

HMA also had to restate $31 million in earnings from federal electronic health record incentive payments at 11 hospitals; the company said it returned most of those funds to the CMS and is repaying the balance to state programs because those hospitals did not meet the government's meaningful-use requirements.

Follow Beth Kutscher on Twitter: @MHbkutscher