Melissa Davis
OKLAHOMA CITY -- Long-suffering Health Management Associates (HMA Quote - Cramer on HMA - Stock Picks) has lost its "turnaround" CEO.
Burke Whitman is leaving the rural hospital operator after just one year in the top job. In its official statement on the move, the company said that Whitman -- a colonel in the Marine Corps Reserve -- has decided to accept "new responsibilities in military service" instead. HMA has replaced the popular Whitman with one of its former executives. Gary Newsome, who served as a vice president during HMA's glory days, is now returning as the company's new CEO. Newsome has spent the past 10 years in the executive suite at rival Community Health Systems (CYH Quote - Cramer on CYH - Stock Picks). Sheryl Skolnick, senior vice president of CRT Capital Group, expressed shock and concern at the move. "In our view, this is NOT good news, as the leadership change in the midst of a turnaround likely stalls it," Skolnick wrote on Monday. "We expect, given other events that are likely to make for a difficult day in the market, that HMA shares could fall significantly on this news." HMA suffered a major hit, in fact, plummeting 10% to $4.94 on a bloody day for the market overall. Several other hospital operators -- including Community Health, Tenet (THC Quote - Cramer on THC - Stock Picks) and LifePoint (LPNT Quote - Cramer on LPNT - Stock Picks) -- lost some ground as well. With Lehman Brothers (LEH Quote - Cramer on LEH - Stock Picks) filing for bankruptcy and Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) rushing into the arms of a savior, investors clearly feel panicked. HMA itself has been hurting for some time. The company was already struggling with weak patient admissions and rising bad debts from the uninsured when it hired Whitman as its operating chief two years ago. With its performance further deteriorating, the company promoted Whitman to CEO last summer and officially put him in charge of its turnaround.
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