Columbia/HCA Healthcare Corp. is forging ahead with its corporate makeover, preparing to spin off or sell three groups of hospitals and adding a new board member.
Despite last week's news that at least one more indictment of a former employee is imminent in Florida in coming weeks, Chairman and Chief Executive Officer Thomas Frist Jr., M.D., waxed positive with shareholders at the company's annual meeting in Nashville last week.
"A lot has been accomplished since (last) July 25," when Frist took the reins of the company, he told investors. "We're not where we want to be. Far from it. But we are making good progress."
Dialogue with the U.S. Justice Department is ongoing, Frist said. Columbia is the target of a federal probe into possible Medicare fraud.
Federal prosecutors in Tampa, Fla., said they expect at least one more indictment before a grand jury finishes its session at the end of June. Three middle-level managers already indicted in the Florida probe will go on trial in October.
Frist said the company hopes to resolve the probe by the second quarter of 1999.
"I don't want to jeopardize things," Frist said, declining further comment on the investigation. "They (the government) dictate the time frame."
Plans are still in place to spin off two hospital divisions, known as the America and Pacific groups. The company plans to file soon for an Internal Revenue Service ruling on whether the spinoffs can proceed tax-free. A ruling could take six months.
The bulk of the hospitals in another division, the Atlantic Group, could be sold to a consortium of not-for-profit systems, Frist said. "It may be one transaction, or it may be several," he said.
Baptist Medical Center in Montgomery, Ala.; Alliant Health System in Louisville, Ky.; and Novant Health in Winston-Salem, N.C., are prepared to spend more than $1 billion to acquire a chunk of the 45-hospital Atlantic Group (May 4, p. 4).
Columbia President and Chief Operating Officer Jack Bovender said the IRS would be more likely to give a tax-free ruling to two spinoffs instead of three.
Columbia is still peddling its home health operations, which have been losing money due to negative publicity and physicians wary of their referrals.
The annual meeting also afforded Frist the opportunity to pay tribute to the old guard. Two longtime board members, William Long and Donald MacNaughton, were retired from the board with fanfare.
Joining the board is Thomas Murphy, chairman and CEO emeritus of Capital Cities/ABC, now a wholly owned subsidiary of Walt Disney Co.
Murphy steered Capital Cities/ABC for 24 years. He retired in 1996 after the company merged with Walt Disney, where he now holds a seat on the board of directors. He also sits on the board of trustees of New York University Medical Center.