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The 60 Minutes investigation into healthcare costs has thrust Health Management Associates (HMA) into the spotlight. The report alleges that HMA pressured doctors to admit as many patients as they could regardless of actual medical needs. It also states that nearly half of the company’s revenue comes from Medicare and Medicaid.

HMA: Truth Be Told?  - ERvisits

Overall, 12.9% of emergency room visits are admitted to a hospital. That percentage encompasses different patients, payor types and other factors that vary greatly. HMA’s admissions target rate is 20%, nearly double the industry norm. Evidence shows that the company pushed its doctors to find reasons to admit patients regardless of their medical condition. Computer programs automatically admitted patients and ordered tests before being seen by a physician. HMA says that their admission rates are near or below the industry average.

HMA’s stock hasn’t been affected by the investigation but that can easily change if the allegations have legs. Hedgeye Healthcare Sector Head Tom Tobin notes that the government will have a tough time proving HMA is guilty but if successful, the company will face an enormous fine:

“Medicare billing fraud under FCA regulations carries a 3X damages award plus a civil charge per case, which quickly spins into A LOT OF MONEY if HMA is found to be guilty.”