In a letter to Community's board of directors, AFT President Randi Weingarten wrote that hedge fund Glenview Capital Management had a serious conflict of interest stemming from its role as the “most influential player on both sides of the transaction.”
In a response to Weingarten, Rachel Seifert, Community's executive vice president and general counsel, said the transaction was negotiated at “arm's length” between the management teams and boards of both companies, and that Glenview “had no role whatsoever” in the negotiations.
Although Weingarten's letter focused primarily on Glenview's role, it alluded to other concerns the union has had with Community's treatment of registered nurses. “Our concerns are furthered by 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,” she wrote.
AFT Healthcare this year launched a critical media campaign alleging that Community cares more about growth through acquisitions than patient care. A cornerstone of the effort is the CHSWatch.org website.
“I want to assure you that our organization deeply values the registered nurses represented by AFT, and we are working collaboratively with the nurses to benefit the patients and the nurses,” Seifert wrote in her response to the AFT.
Glenview, which owns 14.5% of HMA's shares, became an activist investor in May and successfully led a coup to replace HMA's entire board of directors. HMA already had an offer from Community on the table, which the new board was tasked with evaluating and ultimately approved. Glenview is also Community's largest shareholder, with a 9.9% stake as of Sept. 30.
Weingarten also sent copies of the letter to the Securities and Exchange Commission and the Federal Trade Commission.
Each of AFT's funds, which range from the $160 billion California State Teachers' Retirement System to the smaller Chicago Teachers' Pension Fund, can weigh in on the merger when it comes up for a shareholder vote next month.
In aggregate, the AFT funds hold about $68 million in Community shares and about $34 million in HMA shares—collectively making them a top 15 and top 20 shareholder, respectively, according to the AFT.
Weingarten's letter points out that shareholders already have filed lawsuits over the bid price for HMA, which was below the company's closing price on the day before the deal was announced.
Follow Beth Kutscher on Twitter: @MHbkutscher