If all the talk about Columbia's spinning off its less profitable, less urban hospitals evokes a feeling of deja vu, that's because this is not the first time Thomas Frist Jr., M.D., has used the strategy.
Frist founded Hospital Corporation of America in Nashville in 1968 with his father, Thomas Frist Sr., M.D., and Jack Massey, taking the company public in 1969.
In August 1987, Frist Jr. was chairman, president and chief executive officer of HCA when it spun off 104 of its 185 hospitals into a new employee-owned company called HealthTrust-The Hospital Co. in a $2.1 billion deal.
HealthTrust became an employee-owned corporation, leaving HCA with 78 mostly healthy urban hospitals.
"At that time, we said, 'Wait a minute, what's the best structure?' and we spun out HealthTrust," Frist says.
In March 1989, HCA became private again through a leveraged buyout, and the same year, the company sold its contract management unit to a group of employees and created what would soon become Quorum Health Group.
Columbia Hospital Corp., at the time based in Fort Worth, Texas, went public in 1990 and went through several mergers and acquisitions before buying HCA in 1994.
Bringing the cycle full circle, Columbia/HCA Healthcare Corp. acquired HealthTrust in 1995.
Scott Mercy, the new chairman and CEO of LifePoint Hospitals, one of the current spinoffs, says Frist is just applying the same prototype to Columbia's current situation.
"I give him a lot of credit for realizing it's critical for the remaining company to focus on its remaining assets and to find opportunities for the other assets," says Mercy. "In the 1980s we did this; now Tommy's just applying the same business model."
Mercy was assistant to the president at HCA during the spinoff of HealthTrust. In fact, Kenneth Donahey, chief financial officer at LifePoint, sat across the negotiating table from Mercy during the HealthTrust spinoff. Donahey worked at HCA since 1977 and became senior vice president and controller of HealthTrust in 1987.
And if that's not enough to confuse time travelers, LifePoint's management has operated out of the old HealthTrust offices since the team was formed last September.
What goes around comes around.