The chief executive officer of the nation's largest hospital chain, HCA-The Healthcare Co., has come full circle.
Thomas Frist Jr., M.D., who founded HCA's predecessor company with his father in 1968 and came out of semi-retirement in 1997 to contend with a fraud probe that culminated in an $840 million settlement, has stepped aside as CEO.
Nashville-based HCA announced last week that Frist, 62, had relinquished his post and named Jack Bovender as his successor. Frist will remain chairman of the company's board of directors. The move brings him back to the post he held in 1997 before taking the reins at one of HCA's darkest hours.
HCA's announcement came within a week of a similar move by Health Management Associates, Naples, Fla., which also rang in the New Year by naming a new CEO (Jan. 8, p. 22).
Bovender, 55, who most recently had been HCA's president and chief operating officer, is now president and CEO. As chairman, Frist will continue to be involved in corporate strategy for at least a year of transition, he said in an interview last week with Modern Healthcare.
"I've always, quite frankly, had a strong belief that if at all possible, you turn control over or the change of control occurs at times of strength," Frist said. "We came back first to assess what we'd inherited. We were in crisis. People were saying the company might not survive. Three and a half years later, it's as strong as any company in my 35 years in the hospital sector."
Smooth transition in works
Analysts said the move is a natural evolution for the company.
"Obviously, Jack Bovender came back as part of the group Tommy (Frist) brought back," said A.J. Rice, a healthcare analyst at Merrill Lynch &_Co. in New York. "The move is recognition of his contribution to the positioning of the company."
Frist and his family are still the company's largest shareholders, and as chairman of the board, he will continue to oversee finance, development, legal, and investor and government relations. Frist said he hopes to follow in the footsteps of his father, who continued to be involved in the company until he was well into his 80s.
"But Jack will call the shots," he added.
Bovender, a 31-year healthcare veteran, has been with HCA for 20 years. He began his career as a U.S. Navy lieutenant stationed at the Naval Regional Medical Center in Portsmouth, Va., and later served as CEO of two hospitals owned by HCA in Florida. In 1992, he was named executive vice president and COO of HCA.
He left the company in 1994 when Columbia Hospital Corp., Louisville, Ky., bought it, and the combined companies became Columbia/HCA Healthcare Corp. But in 1997, Frist called upon Bovender, who at that point had retired from healthcare, to help lead the organization through a restructuring prompted by the damaging fraud investigation that led to the ouster of Richard Scott, the company's CEO at the time.
Bovender has overseen HCA's restructuring from a company with more than 300 hospitals to one that currently has about 200. He also conceived an initiative to consolidate HCA's back office functions into regional centers, which the company expects to complete by the end of next year. HCA is not naming a replacement COO at this time because Bovender will continue to oversee operations, Bovender said.
As times have improved for hospital chains, HCA has stepped up its strategic acquisitions and expansion plans for its existing markets. Bovender said HCA is already planning to build two new hospitals, one in Denver and one in Las Vegas, and will be looking for other opportunities to expand in more of its markets.