How big and successful can Columbia/HCA Healthcare Corp. get in 1996?
A top Columbia executive privately passed on this line from the movie "Apollo 13" as the company's informal motto: "Failure is not an option."
As the nation's largest healthcare system rolls on, no one looks strong enough to stand in its way.
The Catholics? Nope. Some are considering selling out themselves.
The not-for-profits? Their self-designated spokesman on the dangers of for-profit medicine, C. Thomas Smith, seems less resolved than in the past. Smith, president and chief executive officer of the not-for-profit hospital alliance VHA, now is also a director of InteCare, a company that will help not-for-profits access capital markets by converting to for-profit status.
What about physicians or labor unions? Both pose challenges but none that looks overwhelming.
Where Columbia rumbles, turmoil will follow in 1996. Like it or not, Columbia and its founder, Richard Scott, have been agents of change in the hospital industry. In many markets, change has been slow because executives haven't wanted to put each other out of business. Scott appears to have no such qualms.
Columbia will broaden its influence in 1996, no doubt offending some physicians, reporters and lawyers in the process. The Nashville, Tenn.-based chain is the nation's 10th-largest employer, yet the average American has little idea of what the company does or who runs it. Look for that to change this year as Columbia exercises its marketing muscle.
Can a company with 337 hospitals and about $17 billion in 1995 revenues keep growing at such a torrid pace? Again, failure is not an option if it wants to keep Wall Street happy, which is crucial for investor-owned hospital chains. Keep the financial gods happy and you'll borrow at a cheaper rate and make more money for your stockholders.
And what does Wall Street want? Two words: profit growth. So far, Columbia has delivered. Net income climbed 41% to $267 million in the first nine months of 1995 compared with the year-ago period. Analysts believe revenues will hit $20 billion in 1996 as the company continues to snap up hospitals.
But growth has a price. As Columbia, Tenet Healthcare Corp. and others keep buying hospitals, more hospital employees and managers could find themselves out of work in 1996.
"In the past, we could afford layers of bureaucracy in a hospital," said Jack Finn, president of the Metropolitan Hospital Council in New Orleans. Not anymore.
In 1996, this economic reality will hit hardest in the North and Northeast, where Columbia is staking out territory. For example, Columbia officials have said they're prepared to spend $3.5 billion setting up a network in Massachusetts.
Ironically, Northeastern hospitals now have the nation's lowest profit margins and the highest levels of staffing, according to HCIA, a Baltimore-based healthcare information company. In 1994, hospitals in New England and the Middle Atlantic region reported 6.7 and 7 full-time-equivalent employees, respectively, for every 100 adjusted discharges, HCIA reported.
Nationally, investor-owned hospitals reported 5.75, at least one FTE fewer, for every 100 adjusted discharges, according to HCIA.
Will Columbia's presence bring turmoil here? You can count on it.
