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Fight to Replace HMA Board Continues as Buyer Steps Forward

Margaret Dick Tocknell, for HealthLeaders Media, July 31, 2013

Health Management Associates' largest shareholder says it intends to proceed with plans to replace the sitting HMA board, hours after Community Health Systems said it would acquire the embattled hospital chain.

Health Management Associates can't catch a break.

Just hours after Nashville-based Community Health Systems announced an agreement to acquire the Naples, FL-based HMA, Glenview Capital Management, Health Management Associates' largest shareholder, announced its intention to "move forward" with its effort to replace the sitting HMA board through a stockholder vote.

The vote, say some industry analysts, would amount to a "shadow vote" on the CHS acquisition.

This latest move by Glenview caps several months of upheaval for 71-hospital HMA, including an ongoing federal investigation, the adoption of a "poison pill" to ward off an unwanted takeover, and the unexpected retirement of its CEO. Yesterday HMA announced that John M. Starcher Jr., HMA's eastern group president, will serve as interim president and CEO effective Aug. 1.

HMA badly needs the acquisition. "It needs to do something, whether that's merging with CHS or replacing the board" states Frank Morgan, a healthcare services analyst with RBC Capital in Nashville. "It basically doesn't have a CEO; there's no heir apparent, and it's facing deterioration in its EBIDA."

Glenview, a New York City-based hedge fund which owns 14.6% of HMA stock, has been an active critic of the hospital system's board. In an SEC filing earlier this month calling for the election of a new HMA board, Glenview referred to the sitting board as "insular" and without a "path toward continuous improvement and growth."

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