History
HCA was founded in 1968, in Nashville, Tennessee by Dr. Thomas Frist, Jr., Jack C. Massey and Dr. Thomas Frist, Sr. Dr. Frist Sr. is the father of former U.S. Senate majority leader Bill Frist. Richard M. Bracken is the current CEO of HCA.
The first hospital that HCA owned was Park View Hospital, located near downtown Nashville. The small group of founders worked out of a small house not far from Park View for the first few years of operation.
In 1969, HCA conducted its first Initial Public Offering (IPO) on the New York Stock Exchange (NYSE). As HCA grew, the small house that first served as office space for the original HCA employees no longer provided the needed space. In 1972, the company built a new corporate office to house corporate operations behind Centennial Park in Nashville.
During the 1970s-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 1989, the hospital operator was acquired for $5.3 billion in a management buyout led by Chairman Thomas J. Frist 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.
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. Following the raids, the Columbia/HCA board of directors forced Rick Scott to resign as Chairman and CEO. 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. In 1999, Columbia/HCA changed its name back to HCA, Inc.
After Scott stepped down Frist Jr. returned as chairman and CEO. He called on longtime friend and colleague Jack Bovender to help him turn things around. Frist and Bovender, who became CEO in 2001, pulled off what Fortune Magazine called a remarkable corporate rescue.
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.
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.
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. In all, civil law suits cost HCA more than $2 billion to settle, by far the largest fraud settlement in US history.
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. The lawsuit was settled in August 2007 with HCA agreeing to pay $20 million to the shareholders.
In August, 2005 hurricane Katrina hit the city of New Orleans. HCA’s Tulane Medical Center is located in the heart of the city. As the hospital lobby filled with water, hospital administrators alerted the HCA corporate office of the situation. While many in New Orleans, including Charity Hospital across the street from Tulane, waited on an organized federal response, HCA launched a plan to rescue patients and employees at Tulane Medical Center. About 50 patients from Charity were also evacuated as a result of HCA’s efforts. The plan would later be regarded as a textbook example of disaster response. Teams in Nashville leased a fleet of 20 helicopters, including a privately owned Blackhawk, from around the region to evacuate the critically ill. Ham radios operators were also brought in to act as air-traffic controllers. Helicopters would land on top of the parking garage and at night, car lights provided the necessary light for landing and taking off. The evacuation included two patients who, with their medical equipment, weighed more than 400 pounds. All in all, more than 1,600 people were evacuated and moved to safer facilities as a result of this operation.
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 buyout, eclipsing the 1989 buyout of RJR Nabisco. It would later be surpassed by the buyouts of Equity Office Properties and TXU.
On Friday May 7, 2010, HCA announced that the corporation would once again go public with an expected 4.6-billion dollar IPO.
In 2011, The Leapfrog Group recognized HCA for improving the safety of mothers and babies by reducing elective deliveries before 39 weeks. HCA cited a 2007 study conducted in 27 HCA facilities that examined over 17,000 deliveries to determine whether a baby born at 39 weeks was healthier than a baby born at 37 or 38 weeks.
And in 2012, The Joint Commission included 96 HCA hospitals in its list of 620 Top Performers.
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