Accretive Health bounces back on analyst upgrade
Accretive Health rises as analyst says company will win new business despite legal concerns
NEW YORK (AP) -- Shares of Accretive Health Inc. rebounded Tuesday after a Cowen and Co. analyst upgraded the stock, saying many hospitals are still willing to do business with the company despite a recent lawsuit regarding its business practices.
THE SPARK: Analyst Charles Rhyee raised his rating to "Outperform" from "Neutral." Rhyee said his firm recently conducted a survey of CEOs and chief financial officers from 80 hospitals, and most of them said they would still do business with the Accretive Health. The Chicago company helps hospital systems manage their revenue cycles, works on bill preparation and tracks medical treatments.
"Despite some reputational damage there remains interest in Accretive Health although with some caveats and assumptions," he wrote. "Accretive's ability to sign new business may not be as severely damaged as investors originally feared."
THE BIG PICTURE: Minnesota Attorney General Lori Swanson filed a lawsuit against the company in January. Swanson said Accretive Health advised Minnesota hospitals to use high-pressure tactics to collect money from some patients, including emergency room visitors, before administering care. Swanson said those tactics appeared to violate federal and state laws.
Swanson also said the company failed to keep health care records for tens of thousands of patients confidential and did not tell patients how much it was involved in their health care. Accretive has asked that the lawsuit be dismissed and said the allegations are "baseless."
In March the company modified its business agreement with a Minnesota hospital operator, but that hospital operator decided the next month to end the contact altogether.
Rhyee said Accretive Health should consider leaving the consumer collections business.
An email seeking comment from Accretive Health failed to draw an immediate reply.
SHARE ACTION: Shares of Accretive Health rose 56 cents, or 5 percent, to $11.80 in afternoon trading. The stock is down 39 percent since April 24.
