Thomas Frist Jr., M.D., plans to step aside as chairman of HCA in January, after leading the company he founded with his father through a stormy four-year restructuring brought on by a federal fraud investigation.
Jack Bovender Jr., the 55-year-old president and chief executive officer of the for-profit hospital company, will become chairman and CEO when Frist, who is 62, leaves.
Effective last week, Richard Bracken, 48, who has been president of the company's western group, was promoted to chief operating officer, a position previously held by Bovender. Bracken will become president next year when Bovender becomes chairman.
Samuel Hazen, 41, chief financial officer of the western group, has been promoted to president of the division. Bracken and Hazen are assuming their new duties in time for the beginning of the 2002 budget cycle.
"Four years ago, Jack Bovender and I returned to the company and began a thoughtful process to refocus our strategic direction, restructure our assets and organization, change our operating strategy and style, and implement a values-based, patients-first culture," Frist said in a written statement.
"These initial goals have all been achieved, and the executive management team that we have put together over the past four years has led HCA to new levels of success," he said. "It is now time to begin an orderly transition of HCA's leadership team that will guide this company to even higher levels of achievement in the coming years."
Frist declined an interview request from Modern Healthcare through HCA spokesman Jeff Prescott, who said Frist preferred to keep a low profile during the transition.
Frist returned to the helm of HCA, the nation's largest hospital chain, four years ago at the height of management turmoil brought on by a federal investigation into the company's practices. HCA has since agreed to pay the government $840 million in criminal and civil penalties to resolve fraud charges. Portions of the federal investigation have not been resolved.
Frist and Bovender launched a transformation of the company, spinning off nearly one-third of its hospitals and abandoning a voracious acquisition strategy and branding campaign. "In the life of the company, it's the right time," Prescott said of Frist's resignation. "The turnaround has gone real well; the climate is good. It's a good time to have a smooth, orderly transition."
Frist will continue to be a member of HCA's board and will maintain an office in the company's corporate headquarters, Prescott said.
"Dr. Frist might scale back some of his participation in meetings, but he's going to continue to be an active participant," he said.
Bracken has been at HCA since 1981 and has held various executive positions, including CEO of HCA's 680-bed Centennial Medical Center in Nashville, the company's headquarters. He has been president of HCA's western group, which includes for 80 of the company's hospitals and generates $9 billion in annual revenue, since 1997.
"I've worked with Tommy Frist and Jack Bovender for a lot of years," Bracken said. "I'm very comfortable with them and their culture, and I think they're comfortable with me; we're anticipating a rather smooth transition."
HCA owns or leases 196 hospitals.
Meanwhile, the company operated by one of the executive casualties of the HCA fraud investigations, Ardent Health Services, Nashville, was poised last week to buy its first acute-care hospital from a company cast off from HCA because of the same investigations.
Ardent, formerly Behavioral Healthcare Corp., has signed a definitive agreement to purchase 183-bed Summit Hospital, Baton Rouge, La., for $19 million from Triad Hospitals, Dallas. Ardent's chairman, president and CEO is former HCA executive David Vandewater, who was COO of the then-Columbia/HCA Healthcare Corp. until 1997, when he resigned amid the federal fraud investigations.
Ardent, which owns 23 behavioral hospitals in 11 states, last month disclosed plans to shift its emphasis from behavioral-care hospitals to acute-care facilities (July 2, p. 16). Triad had previously disclosed plans to sell the Louisiana hospital, which it inherited from Quorum Health Group. Triad was spun off from HCA in May 1999.
New York investment firm Welsh, Carson, Anderson & Stowe has invested $145 million in Ardent to fund purchases of about six acute-care hospitals. Ardent is also said to be interested in buying several hospitals from Paracelsus Healthcare Corp., which officially changed its name to Clarent Hospital Corp. on July 9, when it began its voluntary bankruptcy reorganization under Chapter 11.