My oh my. Don’t we have a pretty enough dustup going on here without the need for more schaudenfreude? Apparently not.
As most of you know, Community Health Systems (CYH) made a $3.3 billion hostile takeover bid for Tenet Healthcare Corp (THC) late last year.
Since then, things have gotten rather ugly, with Tenet suing CHS this month over allegations that its suitor was, shall we say, not playing by the rules of the game.
More specifically, it accused CHS of gaming Medicare by admitting patients who weren’t sick enough to merit a costly inpatient stay. Tenet argued that by building such system-gaming into its offer, CHS was over-valuing the stock it was using to pay for the takeover and overstating the savings it could accomplish.
Since then, CHS converted its takeover big from part-stock, part-cash to all cash. And today, April 20, CHS moved to have the Tenet suit dismissed, contending that with the stock out of the picture, Tenet had no basis to whinge about the deal. (For brownie points, here’s CHS’s press release on the request for dismissal.)
Still, even if Tenet’s Trevor Fetter and CHS’s Wayne Smith let bygones be bygones and throw a joint Passover Seder — complete with charoset! — the host of troubles springing from this deal is pretty ong:
* CHS has gotten a subpoena from the HHS OIG over possible Medicare and Medicaid billing fraud, matters which, one imagines, might not have come to the feds’ attention for quite some time if CHS execs had held their fire. (Look how far Columbia/HCA was able to go, and for how long, before the s–t hit the fan. Just ask our friend Rick Scott — oops, I mean Governor Scott.)
* Law firms like this one are sniffing the entrails to see if they can gin up a shareholder suit out of this somehow. And why not? Hey, shareholder suits are to the moneyed class what slip-and-falls are for the down-and-out — they file for the money, but being righteously justified is a nice payoff too.
* Suits and counter suits, federal subpoenas and shareholder angst aren’t good medicine for either players’ stock, which has been skidding in the wake of all of these skirmishes.
Hey, what ever happened to good old-fashioned tear-their-throat-out competition within markets? Seems to me the play these days is to tighten up local health system networks rather than try for an outmoded “economies of scale” merger, anyway. But that’s just me. You?