New Columbia Shareholder Committee
1343 L. Street, N.W.
Washington, D.C. 20005
1-800-732-2953
Fax (202) 898-3309
[email protected]
www.newcolumbia.com
March 23, 1998
Dear Fellow Columbia/HCA Shareholder:
As the date for the election of new directors at
Columbia/HCA approaches, we and other shareholders believe that
this is a unique moment in our company's history and one calling
for uncommon steps. For these reasons, we have identified and
nominated two outstanding candidates to serve as independent
directors of our company: former SEC Commissioner Steven M.H.
Wallman and former Medicare and Medicaid Administrator Howard
Newman.
We understand that the nomination of candidates by
shareholders is an unusual step and one which should not be
undertaken lightly. However, because of the extraordinary
challenges facing the company in the coming year, there is the
need for inclusion of directors who not only have the
qualifications necessary to address the crucial issues facing our
company, but also are independently selected.
We anticipate that the company may also nominate qualified
individuals from outside current management. However, in
addition to bringing to the board superb qualifications and
experience in securities law, good corporate governance,
regulatory compliance, health care delivery and health care
policy, Mr. Wallman and Mr. Newman will bring a perspective that
can only be attained by individuals nominated directly by
shareholders, independent of the guiding voice of management.
Steven M.H. Wallman, 44, served on the Securities and
Exchange Commission from July 1994 to September 1997. He earned
a reputation as the SEC's foremost advocate for the right of
shareholders to appropriately participate in the governance of
the companies they own. Prior to his appointment to the SEC, he
was a corporate and securities law partner in the Washington,
D.C. law firm of Covington & Burling where he represented public
companies on fiduciary responsibility issues, business
transactions and disclosure obligations. He is currently a
Senior Fellow (non-resident) at the Brookings Institution, a
consultant and an entrepreneur. Mr. Wallman's proven record in
promoting full and clear disclosure of information and active
shareholder participation will make him a valuable addition to
our Board.
Howard Newman, 62, will bring a new depth of experience to
Columbia/HCA's relationships with two crucial customers -- the
Medicare and Medicaid programs which together account for 40% of
company revenue. Newman served as Administrator of the Health
Care Financing Administration (Medicare and Medicaid) in 1980-81
and as Commissioner of the Medical Services Administration
(Medicaid) in 1970-74. He also spent 17 years as a hands-on
hospital manager, including six years as President of the
Dartmouth-Hitchcock Medical Center in Hanover, New Hampshire.
Mr. Newman is currently a professor in the Health Policy and
Management program at the Robert F. Wagner Graduate School of
Public Service at New York University, where he served as Dean in
1988-94.
A copy of our preliminary proxy is available on EDGAR. You
can obtain a copy of that document and fuller biographies of both
candidates by returning the enclosed card.
By supporting Messrs. Newman and Wallman you can add two
truly independent voices -- a forceful shareholder advocate and a
seasoned health care professional--to the Columbia/HCA board.
Sincerely,
Andrew Stern
Chairman SEIU Master Trust
<PAGE>
Columbia/HCA Chronology
March 18, 1997: Shares close at 43 1/8th.
March 19, 1997: Federal agents raid four Columbia/HCA hospitals
in El Paso, Texas, and the offices of 20 doctors affiliated with
the company.
April 8, 1997: A class action lawsuit is filed on behalf of
shareholders alleging securities fraud.
May 15, 1997: Shareholders vote, over management objections, to
eliminate "poison pill."
July 16, 1997: The FBI and other federal agencies serve 35 search
warrants at Columbia/HCA locations in seven states.
July 25, 1997: CEO Richard Scott and COO David Vandewater resign.
Vice chairman (former Chairman) Dr. Thomas Frist Jr. resumes the
Chairmanship and becomes CEO.
July 30, 1997: Federal prosecutors in Florida indict three
mid-level Columbia/HCA officials.
August 14, 1997: New York State Comptroller H. Carl McCall files
a derivative shareholder lawsuit against current and former
Columbia directors, alleging that they placed the company at risk
of prosecution for alleged fraudulent practices.
September 22, 1997: The New York Times reports a pledge by Dr.
Frist to name two independent directors before the end of
October.
September 25, 1997: A class action lawsuit is filed on behalf of
consumers alleging fraudulent practices at Columbia/HCA.
October 6, 1997: Federal investigators partially unseal an
affidavit alleging "systemic" fraud at Columbia/HCA facilities.
November 24, 1997: Ten public pension funds and the SEIU fund
join New York Comptroller McCall and New York State as plaintiffs
in the derivative lawsuit.
January 14, 1998: CEO Frist states he will announce three new
board members in about two weeks.
February 13, 1998: Columbia reports a net loss of $1.2 billion
for the fourth quarter of 1997.
March 13, 1998: SEIU files preliminary proxy and notice to
nominate Steven M.H. Wallman and Howard Newman as independent
directors; as of this date, the company has neither named any
independent directors nor announced its slate of director
candidates.
March 19, 1998: One year after the original fraud raid, Columbia
stock trades at 30 3/8ths, down 30% from the pre-raid price.
[chart of Columbia/HCA closing stock price for one year]
<PAGE>
Columbia/HCA Board Candidates Information Request
[side 1]
This is not a proxy card and cannot be used to vote in the
election of directors.
To ensure that the person who should receive Columbia/HCA proxy
related material receives information from the New Columbia
Shareholder Committee, please fill out and return this card by
mail or fax (202) 898-3309.
Name:___________________________
Title:_____________________________
Fund/Firm Name:_____________________________
Address:__________________________________
Phone:________________________________
Fax:___________________________________
E-Mail:__________________________________
Please send me: __ A copy of your preliminary proxy
__ Biographical details on Steven M. H.
Wallman and Howard Newman
[side 2]
New Columbia Shareholder Committee
1313 L St NW
Washington, DC 20005
Disclosure Statement with Reference to the
Candidacies of Steven Wallman and Howard Newman for Election to
Board of Directors of Columbia/HCA Healthcare Corporation
The participants in this solicitation will be the New Columbia
Shareholder Committee, Newman, Wallman, the SEIU Master Trust (a
trust for pension funds jointly administered by SEIU officials
and employers of SEIU members), and the Service Employees
International Union ("SEIU"). The Committee was formed by the
Trust and SEIU for the purposes of this solicitation and welcomes
additional members. The Trust now owns about 47,200 shares of
the Company's common stock for SEIU National Industry Pension
Fund and other funds. In the past two years, the Trust has had
more than 60 transactions in company stock, having owned 121,200
shares as of 12/31/95. The SEIU National Industry Pension Fund
is one of the plaintiffs in the pending derivative suit against
current and former officers and directors of the Company seeking
a recovery for the Company. Other plaintiffs include more than
10 public pension systems, including New York State Common
Retirement Fund and five New York City Employee funds. The SEIU
Master Trust has proposed a shareholder resolution to give equal
access to the Company's proxy card and proxy statement for all
duly-nominated candidates for director.
SEIU will bear the costs of this solicitation, which are
estimated at $30,000, which may include use of a professional
solicitor, and include the provision of counsel to the
candidates. It will not seek reimbursement from the Company. In
addition, its regular staff will solicit proxies, for which they
will receive no added compensation. The persons named in the
proxy card are SEIU President Andrew L. Stern and SEIU Assistant
Research Director Steve Askin. Proxies will be sought by mail,
fax, telephone and personal interview. Neither Newman nor
Wallman have worked for or received any compensation from any
other participant. SEIU has agreed to indemnify them from
expenses and claims arising from this solicitation. They have no
agreements or other arrangements with anyone about their conduct
as director if elected, nor about future transactions involving
the Company, nor regarding future employment by the Company. None
of the participants have any understandings or arrangements with
anyone with respect to the Company's securities. Newman and
Wallman do not own Company stock and have not had any
transactions in the Company's stock or with Company. Local
unions affiliated with SEIU represents about 1000 Company
employees. The Company reported as of 12/96 it had about 285,000
employees and 13 hospitals with some union representation. SEIU
locals regularly engage in negotiations over contracts at
different facilities and currently are doing so for the Company's
Los Robles facility (about 350 employees) and recently negotiated
a successor agreement at the Metrowest facility. SEIU is
currently engaged in an organizing effort at the Company's
Sunrise hospital in Las Vegas. None of these facilities are on
strike. Newman's business address: 4 Washington Square North,
Room 33, New York University, New York NY 10003. Wallman's
business address: 9332 Ramey Lane, Great Falls VA 22066-2025.
