HCA Healthcare Corporation
HCA Healthcare, one of the nation’s largest healthcare companies and private employers, is based in Nashville. The present company represents the merger of several hospital and healthcare companies, primarily the Hospital Corporation of American (HCA) and the Columbia Hospital Corporation. HCA was a Nashville-based healthcare corporation, established as one of the first private healthcare corporations in the country by Jack Massey, Thomas F. Frist Sr., and Thomas F. Frist Jr. in 1968. Frist Sr. began the company by organizing Park View Hospital in Nashville in 1956. After the creation of Medicaid and Medicare in 1965, the number of for-profit hospitals across the country began to grow. At that same time, Frist and the other doctors at Park View decided to sell Park View Hospital to a new management company to operate the property. Frist Sr. and Frist Jr. then asked Nashville businessman Jack Massey for assistance, and the three established their own management company called Hospital Corporation of America. The new corporation relied on solid leadership and sound financial decisions to quickly become one of the most important private healthcare providers in the country. By 1979 HCA owned or managed 140 hospitals; by the mid-1980s the hospital chain included over 200 hospitals and held contracts to manage 200 more.
From 1987 to 1997 the size and structure of HCA changed to meet the opportunities and challenges of the competitive healthcare industry. In 1987 HCA sold 104 hospitals to the newly created Healthtrust corporation. In February 1994 it formally merged its 97 hospitals with the Columbia Hospital Corporation to create Columbia/HCA, an immediate national leader in the industry. Richard Scott, who established the Columbia Hospital Corporation in Texas in 1987, became the new corporation’s CEO. In 1991 Scott’s Columbia had a base of 12 hospitals; it then acquired Basic American Medical (8 hospitals) in 1992, Galen Health Care Corporation (71 hospitals) in 1993, and then the 97 hospitals of HCA, as well as the 96 ambulatory surgical centers of Medical Care America in 1994. Columbia’s expansion was not over; in 1995 it acquired the 117 hospitals of Healthtrust. According to a 1997 tally, Columbia/HCA owned and operated over 340 hospitals, with properties in thirty-six states and two foreign countries.
Scott’s success story, however, unraveled in the summer of 1997. Federal investigators raided hospitals in seven states in search of evidence of fraud in Columbia’s billings to the federal Medicare program. By July 24, 1997, Scott had resigned as CEO and been replaced by Thomas Frist Jr. Frist immediately announced that “the new CEO of this company is very serious about addressing the government’s concerns, and understands the gravity of the situation.” By the end of August 1997, according to the Associated Press, ten states were investigating Columbia/HCA for possible Medicaid fraud. That October the company established its new Ethics, Compliance and Corporate Responsibility Department.
Over the next three years HCA dramatically decreased its size, reorganized its upper management, and even changed its name (its Nashville area hospitals, for instance, were placed under the TriStar Health System name in 1999). It also entered into protracted negotiations with the federal government over the Columbia investigation. In 2000 settlements between the Department of Justice and HCA required the company to pay a total of $840 million and sign a corporate integrity agreement with the Office of Inspector General. Two defunct subsidiaries, Columbia Management Companies and Columbia Homecare Group, also entered guilty pleas to fourteen criminal counts including charges of conspiracy, receiving unlawful remuneration, and making false statements. With the cases settled, HCA looked forward to a new century of development. For the year 2000, the company reported revenues of $16.7 billion and a net income of $913 million. In early 2001 the company announced that prior Chief Operating Officer Jack O. Bovender Jr. would be the company’s new chief executive officer.
