UHS’ concentrated voting power won’t change under new CEO

UHS' concentrated voting power won't change under new CEO

Before forming UHS, Alan Miller’s previous hospital company, American Medicorp, was subject to a hostile takeover by Humana. That may help explain his longtime practice of holding overwhelming power over the company’s decisions. “He felt like he was on the verge of unlocking value, and that company was taken over by a third party,” said A.J. Rice, a healthcare services analyst with Credit Suisse. “He always wanted to be in the driver’s seat of determining when a big strategic decision was being made, that a short term move in stock wouldn’t dictate that.”Some shareholders have quibbled with UHS’ structure over the years, but for the most part, people who buy UHS stock understand the dynamic going into it, Rice said. When it comes to hospital chains, UHS is the closest thing to a family-run company there is, said Paul Keckley, longtime industry consultant and managing editor of the Keckley Report. The level of power concentrated at the top is unique, and it’s supported by a small board that gives its CEO lots of latitude, he said. “This one is way beyond anything else that I’ve seen,” Keckley said. Alan Miller offered no specific philosophy to explain his high level of control. As he put it, it’s just that he believes in the company.”I have been happy to invest in the company and stay invested in the company and we are shareholders just like every other shareholder,” Miller said. In describing his management style, Alan Miller said it’s all about putting mission first—the mission being taking care of patients in a superior way. He said UHS’ management sees that as its major responsibility. As such, he quickly brushed off allegations from 19 lawsuits UHS recently paid $122 million to settle. In those cases, whistleblowers accused the company’s behavioral health hospitals of fraudulently admitting patients and unnecessarily extending their lengths of stay, among other things, to drive up reimbursement from insurers. “We were never guilty,” Alan Miller said, “and after 6 years the government gave up and there is nothing else to say about it. We have 300-some facilities and they do a great job. There may have been an unhappy employee, and that’s that.” The massive government investigation has been a cloud over UHS for years, and the company’s chief financial officer had been vocal about his desire to reach a conclusion. UHS’ stock price jumped more than 10% when the preliminary settlement was announced last year. Alan Miller graduated from the College of William and Mary in Virginia and then went on to serve in the U.S. Army. He earned an MBA from the Wharton School of the University of Pennsylvania. He’s garnered a number of business awards over the years and Modern Healthcare has placed him on its 100 Most Influential People in Healthcare list for the past 17 years. From the start, Alan Miller said he wanted his company to have three legs: acute-care hospitals, behavioral health and an international division. He said that structure has served it well. Alan Miller’s decision to get into the behavioral health business early on was a key factor in UHS’ success over the years. The sector has emerged as a growth business over the past 15 years as the stigma around seeking mental health treatment has lifted and insurance coverage has improved, Rice said. Rice added that under Alan Miller’s watch, UHS has done a good job of locating in growing markets, especially Las Vegas, and maintaining a conservative balance sheet, which has helped the company take advantage of various opportunities. “People would say he’s one of the icons of the industry,” he said.

Via Source link