The large investor that Tenet Healthcare Corp. made a temporary peace treaty with last week has a well-earned reputation for hospital company activism.
Billionaire Larry Robbins and his company, Glenview Capital Management, own large equity stakes in Community Health Systems, HCA and Tenet. The New York City-based hedge fund also was instrumental in the overhaul and eventual sale of hospital chain Health Management Associates, which was absorbed by Community Health Systems.
And while the benefits of such investors recently have been hotly debated, last year Community Health Systems' CEO Wayne Smith called Glenview's role in the sale of Health Management Associates “the (activist investor) success of the century.”
The scrutiny and influence of stockholders with a lot on the line can keep corporate leaders accountable. But hedge funds often aren't patient. And they can unnerve management. HMA's very battle with Glenview and its eventual fate may have factored into Tenet's recent decision to play nice.
“Our culture at Glenview is to analyze the facts in front of us, and to try to remove emotion or bias from the equation,” Glenview said in a June 2013 letter to HMA shareholders. “In Hollywood terms, we are more Mr. Spock than William Wallace. We were not born to lead fights, but we are simply programmed to follow the logic trail and act accordingly.”
Still, with billions of dollars at stake, even Mr. Spock might sweat a little.
Glenview owns significant shares of health insurers Cigna Corp. and Humana—both of which are in the process of being acquired in multibillion-dollar deals—as well as several pharmaceutical companies, giving the “suggestivist” firm a clear interest in the success of the healthcare industry.
The market value of Glenview's holdings was more than $20 billion as of Sept. 30, according to regulatory disclosures.
Last week, Robbins persuaded Tenet CEO Trevor Fetter and the company's board of directors to create two board seats for Glenview representatives in exchange for a “standstill” pledge not to participate in any shareholder proxy that would disrupt the company's finances and control.
The two sides claim the actions are friendly. The board representatives that Glenview selected, Randy Simpson and Matthew Ripperger, are Glenview partners who are co-leaders of the hedge fund's healthcare practice, according to a joint news release last week. Simpson previously worked on mergers and acquisitions at Credit Suisse before joining Glenview in 2005.