"The risk here is less financial and more related to timing of their IPO (initial public offering) and how much of a monkey wrench this investigation might throw into any such plans the company might have," said Sheryl Skolnick, an analyst with Pali Capital in New York.
Legal observers, however, said Nashville-based HCA could still go forward with plans for a potential sale of stock to the public while it's being investigated. But the company would have to make required disclosures about the probe in any initial securities filing related to an offering.
"It would be up to investors to determine whether or not that was important to them in deciding to invest or purchase the company's stock," said Gary Brown, a securities attorney in the Nashville offices of law firm Baker, Donelson, Bearman, Caldwell & Berkowitz PC.
This week, HCA said the U.S. Securities and Exchange Commission requested information related to a legal dispute with a former employee in its payroll department in London. At issue are claims the employee raised about the accuracy of the company's nurse scheduling system and related compensation paid in its six hospitals in the United Kingdom, HCA officials said.
The company said it provided the information to the SEC, adding that it believes the allegations have no merit.
An SEC spokesman declined to comment. A report in the Washington Post said officials are coordinating with investigators at Her Majesty's Revenue & Customs in London.
HCA is a privately held company, but it has issued public debt and that makes it subject to Securities and Exchange Commission regulations. "The SEC would look at anything that happens anywhere that potentially (has) an impact on the financial statements of a U.S. reporting company," said Donald McKenzie, a Nashville securities attorney.
The six London hospitals are HCA's only operations abroad after selling its two hospitals in Switzerland two years ago.
Over the summer, reports suggested that the hospital chain was among holdings that private equity firm Kohlberg, Kravis & Roberts — one of its owners — was preparing for an initial public offering.
HCA and KKR officials declined to comment. Analysts such as Skolnick said timing of a filing could depend in part on when it becomes clearer what effect health-care reform might have on hospital companies.
The latest inquiry isn't the only brush with regulators for HCA in its history.
An investigation dating to the mid-1990s exposed a massive health-care fraud at the hospital company, resulting in the largest penalty ever imposed on a company in a health-care case.
In 2003, HCA agreed to pay a total of $1.7 billion to the U.S. government to settle charges that it defrauded government insurance programs. The company's
top managers were replaced.
Title, Escrow Services Necessary‘Safety net’ hospitals fear they won’t survive health-care reform
