After years of keeping a low profile, David Vandewater--once second in command at the nation's largest investor-owned hospital chain--is beginning to resurface in healthcare circles. Earlier this month, he was named chairman of Behavioral Healthcare Corp., a Nashville-based, for-profit provider of behavioral healthcare services with 24 hospitals in 11 states.
Vandewater was president and chief operating officer at Columbia/HCA Healthcare Corp., since renamed HCA-The Healthcare Co., when federal agents raided the Nashville company's facilities in 1997 and launched a lengthy criminal and civil Medicare fraud investigation. He resigned from the company in July 1997, as did Columbia Chief Executive Officer Richard Scott, soon after the investigation became public.
Since then, while remaining a resident of Nashville, Vandewater has stayed largely out of the spotlight, although his name has been linked to at least one pending healthcare deal and he has been an active member of Nashville society.
Vandewater did not respond to Modern Healthcare's telephone requests for an interview.
Through Behavioral Healthcare Corp. spokesman John Van Mol, Vandewater declined to discuss reports that he is involved in yet another possible healthcare venture. Vandewater is among four finalist bidders for Quorum Health Resources, the hospital management subsidiary of Brentwood, Tenn.-based Quorum Health Group, according to a source involved in the negotiations who asked not to be named. Triad Hospitals, Dallas, is in the process of buying Quorum and is trying to arrange for the sale of the management unit.
The source confirmed that Vandewater has been working with Welsh Carson Anderson & Stowe, a New York-based investment firm with whom he is affiliated, on a bid for the management business, which is the nation's largest manager of not-for-profit hospitals.
Russell Carson, general partner at Welsh Carson and also chairman of Quorum Health Group's board of directors, did not respond to a request for an interview, but analysts have said the management business could be a profitable investment.
"I think it's a good business," said Andrew Bhak, a healthcare analyst at Morgan Stanley Dean Witter. "It has nice returns on capital and would make a nice acquisition to create a private company."
Welsh Carson also holds equity in Behavioral Healthcare and nominated Vandewater for the chairman's slot there. He was appointed at the same time company founder and CEO Edward Stack resigned. The company has no plans to name a CEO at this time, Van Mol said.
Since his time at HCA, Vandewater has worked on several healthcare-related projects. He served for a short time as president and CEO of Dallas-based United Surgical Partners International, which counts Welsh Carson among its investors, and assisted the company in acquiring hospitals in Europe. He now serves on the board of the company's United Kingdom operations.
Also since leaving HCA, Vandewater joined Scott in investing in America's Health Network, a healthcare cable channel and Internet site that has since been purchased by Fox Entertainment Group.