HCA (NYSE: HCA) On February 6, 2006, Zimmer Holdings, Inc. filed a Form
8-K with the SEC placing in the public record a letter sent to us
regarding the administration of our orthopedic pricing initiative and
certain comments made during HCA's conference call with investors on
February 1, 2006. We have reviewed the Zimmer filing and the basis for
comments on this matter and want to provide the following information.
On the conference call, HCA's President and Chief Operating Officer
Richard M. Bracken referred to the status of the company's contracts
with three orthopedic device manufacturers saying:
"Now, relative to the orthopedic program, please note that we are very
pleased with our current position. As some of you might know, our
program called for a committed compliance percentage with three national
vendors, and included a gainsharing component which is currently under
consideration by the OIG. In return, we received additional discounts.
This compliance percent was to be achieved by December 31. However, at
that point in time, we were several percentage points short."
Thus, Zimmer is correct to assert that it is no longer obligated to
honor any additional pricing discounts under HCA's orthopedic program.
Mr. Bracken further noted on the conference call:
" ... we have now met our target and are anticipating pricing discounts
for the remainder of 2006."
Mr. Bracken made his statement based upon information that he had at
that time. Our subsequent review indicates we were in error and did not
meet that target for any of the three vendors.
At the time of the conference call, HCA was in active negotiations with
representatives of Zimmer to reduce its compliance commitment from 95%
to 90%, and HCA believed it would be able to obtain that change. Having
reviewed the letter from Zimmer filed with the Form 8-K, we conclude we
were wrong in this belief.
"I regret any incorrect statements we have inadvertently made," said
Jack O. Bovender, Jr., HCA Chairman and Chief Executive Officer. "We
will continue to pursue our orthopedic program with our vendors, and I
am hopeful we can resume negotiations to revitalize the long and
positive relationship between HCA and Zimmer."
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Statements in this press release regarding HCA's business
which are not historical facts are "forward-looking statements" that
involve risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those
contained in the forward-looking statements, see "Risk Factors" in the
Company's Annual Report or Form 10-K for the most recently ended fiscal
year.
Investors, Mark Kimbrough, +1-615-344-2688, or
Media, Jeff Prescott, +1-615-344-5708,
both of HCA