Glenview Seeks to Replace Board of Hospital Group

An investor in Health Management Associates, the for-profit hospital system, proposed on Tuesday to replace the company’s board with a new slate of candidates.

Glenview Capital Management, a hedge fund that owns a 14.6 percent stake in H.M.A., argued in a letter to fellow shareholders that the current board had failed to deliver adequate returns. The hedge fund called on shareholders to support eight new nominees for the board.

“For over a decade, despite the best efforts of well-intentioned individuals at the company, H.M.A. has fallen short,” Glenview, which was founded by Lawrence M. Robbins, said in the letter. “Culturally, we believe that an overemphasis on aggregate growth at the expense of per-share value creation and optimal return on capital has led to a substandard strategic and financial approach.”

Shares of H.M.A. opened higher at the start of trading on Tuesday but later fell. Around midday, the stock was down almost 1 percent, to $15.36 a share.

MaryAnn Hodg, a spokeswoman for H.M.A., said the company was preparing a statement.

The announcement by Glenview helps clarify the intentions of the hedge fund, which disclosed in May that it had increased its stake in the hospital group. It also increases pressure on the board. After the May filing, the company adopted a so-called poison pill takeover defense.

Glenview has said it has no interest in acquiring the company. But speculation about a possible takeover has persisted, especially after H.M.A. announced in May that its chief executive, Gary D. Newsome, would retire at the end of July to lead a religious mission in South America.

Earlier this month, Glenview asked the board to remove or change the poison pill to allow investors to amass a stake above 15 percent.

The hospital company said it had hired Morgan Stanley and Weil, Gotshal & Manges to consider “strategic alt! ernatives and opportunities.”

In the letter on Tuesday, Glenview weighed in on the question of whether it would be better to sell the company or to change management and remain independent.

“Our answer may surprise you: we don’t know,” the letter said.

“We have suggested that the company conduct a rigorous and unbiased process to explore all avenues of shareholder value creation including improved capital allocation as well as an evaluation of a sale to potential strategic acquirers,” the hedge fund continued.

Glenview said in the letter that all of its eight nominees had experience in the health care business and that a majority had worked in C-suite roles. The hedge fund proposed that a team from Alvarez & Marsal, a professional services firm, serve as interim management under the new board.

The current directors, Glenview said, appear “insular and stale.” The firm provided further information about its campaign on aWeb site.

H.M.A., which is based in Naples, Fla., has struggled recently with falling inpatient admissions to its hospitals. The company was also the subject of a critical report by CBS’s “60 Minutes” that ran last year.

Glenview, for its part, has stakes in several publicly traded for-profit hospital systems. Mr. Robbins talked up hospital stocks at an investor conference a year ago.