Nashville is marketing itself as the Silicon Valley of healthcare, and it appears to be an easy sell.
The Nashville Health Care Council was founded in 1995 to boost the city as the U.S. healthcare capital. Its 44 corporate founders, most of them for-profit companies, supplied a three-year budget of $1.3 million. The council is part of Partnership 2000, an economic development initiative of the Nashville Area Chamber of Commerce.
"We want to support existing businesses and start-ups and those that are relocating to Nashville," says Laura Campbell Ortale, the council's executive director.
So far, the group has attracted some big-name healthcare players. Among its members are Columbia/HCA Healthcare Corp., PhyCor, Quorum Health Group and Vanderbilt University Medical Center-all based in the Nashville area-as well as Birmingham, Ala.-based HealthSouth Corp. and Minneapolis-based United HealthCare Corp.
Ortale, 32, is the daughter of Victor Campbell, Columbia's senior vice president in charge of investor relations.
Some 140 mostly for-profit companies in the Nashville area provide healthcare services on multistate, national or international levels, Ortale says. As for healthcare-related businesses, 1,700 such organizations were included in a Nashville-area directory the council recently published.
The city's corporate popularity may be tied to Tennessee's business-friendly environment, including a 6% corporate excise tax, one of the lowest in the nation. Another draw for businesses is the fact that Tennessee doesn't have a state income tax on wages or salaries, which aids executive recruitment efforts.
The Nashville Health Care Council provides a further aid to executive recruitment: a "resume bank" for healthcare businesses in search of qualified administrators. The council also has a World Wide Web site (http: www.healthcarecouncil.com), and it sponsors local and national forums and conferences to promote the local healthcare industry and provide networking opportunities for council members.
As far as attracting national interest in Nashville's healthcare activity, Ortale says the council's phones are ringing off the hooks.
"I'm not surprised at the organization's impact, but I'm surprised by the level of phone calls we're getting," Ortale says. "We had 15,000 phone calls in the last year from organizations interested in joining the council, businesses interested in relocating or starting. We also get calls from conferences interested in collaborating with us."
More area companies are expressing interest in the council as well. The 44 founders each committed $10,000 annually for the first three years of the council's operations. Another six members are expected to join soon, which would give the organization a projected annual budget of $500,000.
The council's scope is growing along with the number of member companies. Board members are considering a lower fee to encourage smaller healthcare businesses to join, Ortale says.
"The council has exceeded my expectations, and now we're starting to take this to another level," says one of its founders, Thomas Frist Jr., M.D., vice chairman of the board of Nashville-based Columbia, the nation's largest healthcare provider and the biggest company in the group.
Nashville has always been home to healthcare pioneers in the for-profit hospital industry. Its healthcare foundations began with the formation of Hospital Corporation of America and Hospital Affiliates International in 1968.
Nashville currently boasts 15 publicly traded healthcare companies with annual revenues totaling $25 billion. (The bulk of that comes from Columbia, which had 1996 revenues of $19.9 billion.) Those companies employ more than 310,000 people in the U.S. and several foreign countries, according to the council.
At last count, 78 healthcare-related businesses trace their roots to either HCA or HAI. Some of them were spinoffs or were founded by former HCA or HAI executives and were later acquired by companies outside Nashville. For example, Santa Barbara, Calif.-based Tenet Healthcare Corp. in January acquired Nashville-based OrNda HealthCorp.
But with the constant influx of new companies and capital, observers don't expect a major loss of jobs in the area.
"There are so many start-ups; anyone who loses a job in healthcare is liable to land on their feet in Nashville," says LaDonna McDaniel, vice president of communications for the Nashville Chamber of Commerce.
When Healthtrust merged with Columbia in 1995 and OrNda merged with Tenet earlier this year, some former executives at the acquired companies started their own ventures.
For example, R. Clayton McWhorter, Healthtrust's former top executive, became chairman of Columbia after the merger. But he left that post last year to form Clayton Associates with the intention of investing in Nashville healthcare start-ups.
Last year, McWhorter formed Nashville-based LifeTrust America with New York-based Morgan Stanley Capital Partners to operate assisted-living centers for the elderly in nonurban, rural and suburban markets across the country. Morgan Stanley provided $30 million, while Clayton Associates provided another $3 million.
The Nashville Health Care Council is finding no shortage of new companies to target for membership. Since 1995, more than $500 million in venture capital was committed to launch more than 30 Nashville healthcare companies, including a dozen physician practice management companies. Meanwhile, a dozen Nashville-based investment and venture capital firms have their operations in the city, and since November 1989 16 Nashville-based healthcare companies have issued initial public offerings.
"Our base of business is growing, and we have a rich history of entrepreneurism," Ortale says. "Nashville has been widely recognized by the investment community for a long time, and it's now being more recognized by those in healthcare nationally."