Hospital Corporation of America

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HCA Holdings
TypePublic
Traded asNYSEHCA
IndustryHealth care
Founded1968
HeadquartersNashville, Tennessee, United States
Number of locations273
Area servedUnited States and London
Key peopleRichard M. Bracken (CEO)
RevenueIncreaseUS$33.000 billion (2010)
ProfitIncreaseUS$673,000,000 (2008)
Employees204,000
Websitehcahealthcare.com
 
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HCA Holdings
TypePublic
Traded asNYSEHCA
IndustryHealth care
Founded1968
HeadquartersNashville, Tennessee, United States
Number of locations273
Area servedUnited States and London
Key peopleRichard M. Bracken (CEO)
RevenueIncreaseUS$33.000 billion (2010)
ProfitIncreaseUS$673,000,000 (2008)
Employees204,000
Websitehcahealthcare.com

Hospital Corporation of America (HCA) is an American for-profit operator of health care facilities, the largest in the world.[1] It is based in Nashville, Tennessee and currently manages 162 hospitals and 113 freestanding surgery centers in the United States and United Kingdom.[2]

In 1997, the company was part of a fraud investigation initiated by a number of governmental departments in the United States. Later that year, Rick Scott resigned as Chairman. He later went onto become the 45th and current Governor of Florida. The case was eventually settled in 2002, for a reported total cost of $2 billion to HCA. This made it the largest fraud settlement in US history.

History[edit]

Early years[edit]

HCA founders (left to right) Dr. Thomas Frist Sr., Jack Massey, Dr. Thomas Frist Jr.

HCA was founded in 1968, in Nashville, Tennessee by Dr. Thomas F. Frist, Sr., Jack C. Massey and Dr. Thomas F. Frist, Jr.. Frist Sr. is the father of former U.S. Senate majority leader Bill Frist. Richard M. Bracken is the CEO of HCA.

The first hospital that HCA owned was Park View Hospital, near downtown Nashville.[3] The small group of founders worked out of a small house not far from Park View for the first few years of operation.[4]

In 1969, HCA conducted its first Initial Public Offering (IPO) on the New York Stock Exchange (NYSE).[3] As HCA grew, the small house that served as office space for the company no longer provided enough space. In 1972, the company built a new office to house corporate operations behind Centennial Park in Nashville.[5]

Parkview Hospital circa 1968

Growth & merger[edit]

During the 1970s and 1980s the corporation went through a tremendous growth period acquiring hundreds of hospitals across the United States which numbered 255 owned and 208 which HCA managed.

In 1988, the hospital operator was acquired for $5.3 billion in a management buyout led by Chairman Thomas J. Frist[6] and completed a successful initial public offering in the 1990s. In 1993 HCA merged with Louisville-based Columbia Hospital Corporation to form Columbia/HCA. In April 1998 Birmingham, Alabama-based HealthSouth Corporation announced it was acquiring the majority of HCA's surgical division.

HCA's first office in Nashville, Tennessee

Fraud & investigation[edit]

On March 19, 1997, investigators from the FBI, the Internal Revenue Service and the Department of Health and Human Services served search warrants at Columbia/HCA facilities in El Paso and on dozens of doctors with suspected ties to the company.[7] Following the raids, the Columbia/HCA board of directors forced Rick Scott to resign as chairman and CEO.[8] He was paid a settlement of $9.88 million and left with 10 million shares of stock worth over $350 million, mostly from his initial investment.[9][10] In 1999, Columbia/HCA changed its name back to HCA, Inc. HCA also admitted fraudulently billing Medicare and other health programs by inflating the seriousness of diagnoses and to giving doctors partnerships in company hospitals as a kickback for the doctors referring patients to HCA. They filed false cost reports, fraudulently billing Medicare for home health care workers, and paid kickbacks in the sale of home health agencies and to doctors to refer patients. In addition, they gave doctors "loans" never intended to be repaid, free rent, free office furniture, and free drugs from hospital pharmacies.[11][12]

After Scott stepped down, Frist Jr. returned as chairman and CEO. He called on longtime friend and colleague Jack O. Bovender, Jr. to help him turn things around. Frist and Bovender, who became CEO in 2001, pulled off what Fortune magazine called a remarkable corporate rescue.[13] In settlements reached in 2000 and 2002, Columbia/HCA pleaded guilty to 14 felonies. They admitted systematically overcharging the government by claiming marketing costs as reimbursable, striking illegal deals with home care agencies, and filing false data about use of hospital space.

Corporate office in 1972

In late 2002, HCA agreed to pay the U.S. government $631 million, plus interest, and pay $17.5 million to state Medicaid agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims.[14] In all, civil lawsuits cost HCA more than $2 billion to settle, by far the largest fraud settlement in US history.[15] The name subsequently reverted to "Hospital Corporation of America." HCA abandoned the use of its name in its home market and instead promotes its Nashville hospitals under the TriStar brand.

On July 1, 2005, Senator Frist sold all of his HCA shares two weeks before disappointing earnings sent the stock on a 9-point plunge. Frist claimed that he sold his shares to avoid the appearance of a conflict of interest if he ran for president. Other executives sold their stock at the same time. Shareholders sued HCA in a lawsuit alleging that the company made false claims about its profits to drive up the price, which then fell when the company reported disappointing financial results. 11 of HCA's senior officers were sued for accounting fraud and insider trading. [16] The lawsuit was settled in August 2007 with HCA agreeing to pay $20 million to the shareholders.[17]

Recent history[edit]

In 2006, Kohlberg Kravis Roberts and Bain Capital, together with Merrill Lynch and the Frist family (which had founded the company) completed a $31.6 billion acquisition of the hospital company, making the company privately held again 17 years after it had first been taken private in a management buyout. At the time of its announcement, the HCA buyout was the first of several to set new records for the largest, eclipsing the 1989 buyout of RJR Nabisco. It would later be surpassed by the buyouts of Equity Office Properties and TXU.[18]

On Friday May 7, 2010, HCA announced that the corporation would once again go public with an expected $4.6-billion IPO.

Facilities[edit]

As of 2012, HCA operated 162 hospitals and 113 freestanding surgery centers located in 20 U.S. states and London.[2] The London sites include The Harley Street Clinic, The Lister Hospital, London Bridge Hospital, The Portland Hospital, The Princess Grace Hospital and The Wellington Hospital. In July 2007, HCA sold its hospitals in Switzerland.[19]

The Princess Grace Hospital specializes in breast cancer and surgery, aided by Professor Kefah Mokbel and Dr. Nick Perry who, in 2005, founded The London Breast Institute.

Controversy[edit]

Hospital Corporation of America (HCA) in 1997 was investigated following fraud allegations. Rick Scott resigned as Chairman following the incident, receiving a settlement and stock worth over $350 million. This was later used to fund many of his governmental campaigns.[20]

See also[edit]

References[edit]

Notes

  1. ^ "July 2006 - US hospital firm bought for $33bn". BBC News. July 24, 2006. Retrieved September 9, 2010. 
  2. ^ a b HCA Fact Sheet 2012
  3. ^ a b Dr. Thomas Frist Sr., HCA Founder, Dies at 87, New York Times, January 8, 1998
  4. ^ HCA Facebook Page, photo
  5. ^ HCA Facebook Page, photo
  6. ^ Freudenheim, Milt. Buyout Set For Chain Of Hospitals. The New York Times, November 22, 1988.
  7. ^ "U.S. Expands Search of Columbia/HCA in Texas". The New York Times. 
  8. ^ 2 Leaders Are Out at Health Giant as Inquiry Goes on. New York Times, July 1997
  9. ^ Korten, Tristram (2009-09-30). "Rick Scott profits off the uninsured". Salon.com. Retrieved 2013-08-15. 
  10. ^ "Hospital Firm Ousts Its Founder; Columbia/Hca Tries To Stop Slide. - Free Online Library". Thefreelibrary.com. 1997-07-26. Retrieved 2013-08-15. 
  11. ^ "Disaster Of The Day: HCA". Forbes. December 15, 2000. 
  12. ^ "The risk of choosing Scott". HeraldTribune.com. Retrieved 2013-08-15. 
  13. ^ "Bringing HCA Back to Life After years of scandal, the hospital chain is healthy again--and might just be a buy.". Fortune Magazine. 
  14. ^ Appleby, Julie (December 18, 2002). "HCA to settle more allegations for $631M". USA Today. 
  15. ^ http://www.justice.gov/opa/documents/doj-accomplishments.pdf
  16. ^ "In re HCA Inc., Securities Litigation". Retrieved Jul 26, 2013. 
  17. ^ [1][dead link]
  18. ^ SORKIN, ANDREW ROSS. "HCA Buyout Highlights Era of Going Private." New York Times, July 25, 2006.
  19. ^ HCA sells Switzerland hospitals Nashville Business Journal, June 20, 2007.
  20. ^ "Rick Scott Net Worth". The Richest. Retrieved 28 December 2013. 

Further reading

External links[edit]