Sometimes it seems that patient investors, rather than hospital patients, are the main thing keeping Health Management Associates ( HMA) off the critical list.

Just take a look at the company's stock chart. After a stellar performance throughout most of the 1990s, the shares have bumped along and wound up essentially unchanged around the $20 mark over the past five years. Certainly, the stock has fared better than industry laggard Tenet ( THC) and the much larger HCA ( HCA). However, after a series of high-priced acquisitions in a tough industry environment, the company hardly ranks as the standout investment that it once did.

Sheryl Skolnick, senior vice president of CRT Capital Group, cannot fathom why investors continue to hang on.

"We view HMA as a classic consolidation play that hit a brick wall and can no longer acquire its way out of its problems," Skolnick wrote last month, when reiterating her sell recommendation on HMA after a profit warning from the company. "In our more than 18 years of research experience, we have seen this sad story often enough. But never have we seen such a loyal investor base clinging to its belief in the quality of HMA's assets and the legend of what HMA once was."

For years, HMA managed to thrive -- and post industry-leading margins -- by gobbling up distressed hospitals that monopolize rural markets and turning the facilities around. More recently, however, the company has started paying higher and higher prices for hospitals in real cities such as Orlando, Fla., Jackson, Miss., and its home base of Naples, Fla. Indeed, Skolnick estimates, the company paid a whopping $1.5 million per bed -- nearly three times more than it did for its second-most expensive acquisition -- for its latest hospital and the 400 doctors who came with it.

Moreover, the company executed that transaction at a time when industry volumes have been particularly weak and bad debt from the uninsured has been especially high.

To its credit, HMA has promised to control its appetite for other hospitals going forward. In the meantime, however, the company has found itself struggling to post the kind of stellar results that once drew investors to its stock. And even some long-time holders of the shares have started itching with frustration as a result.

"This has turned into a value stock without a ton of downside. But we're growth investors," said a research analyst for a firm that owns the stock. "This is a position I'm not happy to be in. I don't love HMA; it hasn't been good to us for a long time."

The stock rose 2.1% to $19.74 on Friday but remains near the low end of its 52-week range of $19.04 to $26.41 a share. The company did not return a phone call seeking comments for this story.

High Stakes

Private Capital Management, an investment firm headquartered in Naples, ranks as the company's largest institutional holder, with 21.8 million shares, or 9.1% of the outstanding stock.

The firm failed to return a phone call seeking comments about that investment. However, it has briefly explained its stand in quarterly letters to its clients. During the third and fourth quarters of last year, for example, Private Capital blamed the poor performance of its hospital holdings on the violent hurricane season. More recently, in its first-quarter update, it reported "solid" results for the period and expressed optimism about its hospital investments even though HMA itself had suffered a fall.

The value of Private Capital Management's stake in HMA has declined from $471 million to $430 million since that time.

Meanwhile, the firm has offered abstract reasons for holding on to the stock.

"On the positive side, growing concern about the affordability and accessibility of healthcare is beginning to translate into political action," the firm wrote in its latest quarterly report. "In this vein, several states are currently promulgating legislation that would require all employers to offer some form of healthcare insurance coverage. This development has the potential to substantially enhance the financial performance of our hospital operators, which to this point have had to absorb the cost of uncompensated care."

To be fair, Massachusetts has passed groundbreaking legislation that should lead to universal health care coverage in that state. Moreover, other states are trying to fashion similar laws of their own. But the government moves slowly, at best, and rarely along predictable lines that reassure investors.

Nevertheless, another firm with a stake in HMA seems to be counting on the government -- or at least a major shift in luck -- to bail the company out.

"I've been thinking that things will swing back in HMA's favor," an analyst at this firm said. "But so much of this is politically driven. And I don't have a crystal ball, so I just can't tell."

Since the analyst sees little downside for the shares and plenty of upside potential, he continues to hold on to the stock in the meantime.

'Gale Force Wind'

Skolnick, for one, views that as a mistake. Her $17 price target on the stock suggests that she expects the shares to get even cheaper going forward.

For now, she keeps warning investors to sell the stock before that happens. She doubts that the company's revenue will prove robust for the second quarter despite its high list prices. She expects cash flow to be weak both this quarter and next. And she believes that the company's bad-debt expense could keep on rising.

Not until "the company has finally come to terms with its problems," and investors have stopped awarding the stock a premium that she views as unjust, does she plan to soften her negative stance on the shares.

In the meantime, she marvels at those who continue to feel differently.

"We wonder why investors appear to be compelled to reward this company for poor performance and hold or even buy the shares," she wrote last month. "We suppose we will never understand it -- not when the more than 500-basis-point EBITDA (earnings before interest, taxes, depreciation and amortization) decline since 1997 and the more than 200% increase in acquisition price per bed over the same period, accelerating in recent years, shows just how awful operating metrics have been at this company and how a once-strong franchise has deteriorated.

"We were once indirectly accused of being one of the 'winds of Wall Street swirling around' HMA by an investor in the stock, with the implication that we were unfairly questioning the quality of HMA's earnings (which we still do) and the company's ability to generate growth," Skolnick wrote. "We plan to continue to be that swirling gale force wind around HMA shares until we are satisfied" that things have actually changed for the better.