In the 1960s, a group of Nashville physicians led by Thomas Frist Sr. built their own hospital out of frustration at the service offered at others. Park View Hospital was the seed that ultimately would grow into the nation's largest for-profit hospital chain.
Today, only about 15% of American hospitals are for-profit, but the influence of that company, HCA, still ripples throughout the industry. Through its acquisitions, consolidations, entanglements with the federal government and subsequent divestitures, HCA has influenced the way hospitals around the country, both for-profit and not-for-profit, conduct business.
HCA, originally named Hospital Corporation of America, was born in 1968 when Frist, his son Thomas Frist Jr., M.D., and Jack Massey, a local entrepreneur who helped create the Kentucky Fried Chicken empire, formed a hospital management company. In the early years, HCA assembled a group of hospitals to create economies of scale. The company filed its initial public offering in 1969, and by the end of that year it had 26 hospitals. After two decades of rapid growth by acquisition and consolidation with other companies, HCA completed a $5.1 billion leveraged buyout in 1988 and went private again. The company went public for a second time in 1992 and subsequently merged with Columbia Healthcare Corp., Fort Worth, Texas, creating what was known until last year as Columbia/HCA Healthcare Corp. At its peak, the hospital empire had $20 billion in annual revenue, 285,000 employees, more than 350 hospitals, 145 outpatient surgery centers, 550 home-care agencies and other businesses in the U.S. and abroad.
In 1997, federal agents brought Columbia's aggressive strategies to an abrupt halt when they raided the company's facilities in El Paso, Texas, spawning a civil and criminal fraud investigation that has left an indelible mark not only on the company but on the entire industry. After Columbia's top two executives resigned amid the scandal, the junior Frist returned to the helm as chairman and CEO and announced plans to restructure the company by scaling back its operations, trimming its number of hospitals (to 196 at last count) and abandoning a branding campaign that clearly had backfired.