You could argue that Thomas Frist Jr. has labored longer than anyone to make Nashville known for something besides country music. Hospital Corporation of America, the company founded in 1968 by Frist Jr. and his father, Thomas Sr., made Music City the home of for-profit healthcare, too.
Now known as HCA, the company wasn't the first investor-owned hospital chain, but it has had the greatest impact, and, for a time and in a different incarnation, it also was the greatest source of controversy in healthcare.
"Tommy has been the father of the for-profit industry," says Russell Carson, chairman of Ardent Health Services, Nashville. "He was the pioneer who really helped to create the industry and do it on a large scale. He certainly has been one of the most innovative people in the healthcare industry, and obviously one of the most successful."
Frist Sr. was enshrined in the Health Care Hall of Fame in 1990, and Frist Jr.'s induction this year makes them the hall's first father-son pair.
HCA and its offshoots have led to a booming for-profit healthcare industry in middle Tennessee. The region boasts more than 220 healthcare companies employing 86,000 workers, according to the Nashville Health Care Council. Frist is the council's 2002-2003 chairman, a role he filled in 1995-1996 as well.
The reach and influence of HCA and the Frists have spread with the company's role as a virtual finishing school for corporate healthcare executives. "If you look around the industry, almost everybody has crossed paths with Tommy at one point or another," says Carson, who is also general partner of Welsh, Carson, Anderson & Stowe, a New York-based private equity firm that invests in healthcare service companies.
A family of doctors
Like their father, the three sons of Thomas Frist Sr. became physicians-Robert, a cardiac surgeon, and Bill, a heart-lung transplant surgeon and, more famously, the current Senate majority leader.
Frist Jr., now 64, earned his medical degree in 1965 from Washington University School of Medicine in St. Louis, having completed his undergraduate work at Vanderbilt University in Nashville. After medical school, Frist, who was by then married to the former Patricia Gail Champion, returned home for a surgical internship at Vanderbilt University Medical Center.
It was during the next phase of his career that he formulated the plans that would become HCA. While Frist Jr. was serving as a flight surgeon in the Air Force and based at Warner Robins, Ga., Frist Sr. was deciding what to do with Park View Hospital, which Frist Sr. had built with some other Nashville physicians and investors. The son convinced the father that a multihospital company could provide quality healthcare and good returns for investors.
That single hospital, and a related nursing home, were the start of HCA in 1968. By the end of 1969, the company operated 26 hospitals and had filed for an initial public offering of stock.
In those early years, Frist Jr. recalled in an interview last fall, "being investor-owned, (the company) was suspect in the eyes of the public, including the major lending institutions, many of which were based in the East."
Frist became president and chief operating officer of HCA in 1977. He took the reins as chief executive officer in 1981 and added the chairmanship in 1985.
It was about this time that Jack Bovender Jr. got to know Frist. Bovender, now chairman and CEO of HCA, started working for Hospital Corporation of America at a Pensacola, Fla., hospital in 1975. But it wasn't until he became president of HCA's Eastern Group of hospitals in 1987 and moved to the corporate office in Nashville that he came to know Frist well.
"As a business leader, he's a man of great vision, a very strategic thinker who is able to see seven, eight, nine moves down the chessboard of what needs to be done," Bovender says of Frist.
In 1989, after spinning off 104 rural hospitals into a Nashville-based company known as HealthTrust, Frist led a leveraged buyout of HCA. It re-emerged as a public company in 1992, enriching Frist and the other managers who had taken the company private.
Two years later, Frist and HCA took the fateful step of merging with Columbia Healthcare Corp., Fort Worth, Texas., forming a company that owned or operated 192 hospitals. The merged company, Columbia/HCA Healthcare Corp., settled first in Louisville, Ky., and then made its way to Nashville. Bovender retired. Frist stepped out of the day-to-day operations and became non-executive chairman of the company until it acquired HealthTrust in 1995, whereupon Frist became vice chairman.
`A very badly broken company'
During the next three years, Bovender says, Frist tried to develop a mentoring relationship with Richard Scott, the brash, young corporate lawyer who had founded Columbia and was chairman and CEO of Columbia/HCA.
"I think he had genuinely hoped to see, and tried to help in every way possible, Rick Scott (grow) in his role as CEO, and wanted to be a mentor to him," Bovender says. "I think it was a big disappointment when, for whatever reasons, that didn't work out. As things moved into 1997, and things became more public, he did discuss with me that the company needed to `Stop, take a deep breath, consolidate and manage the assets that it had.' "
By that summer, Frist had the chance to put that strategy into action, as Scott and President and COO David Vandewater resigned from Columbia/HCA when the federal government's probe of its Medicare billing practices burst into the open with a series of FBI raids. During the 31/2 years since the merger, a flurry of deals-including the $5.6 billion purchase of HealthTrust-had swelled Columbia/HCA's portfolio to nearly 350 hospitals.
In an interview at the time with Modern Healthcare, Frist said, "(Scott's aggressive style isn't) the foundation for operating a company in the long term. This is a style issue that needs to be changed. We have to put in a new culture ... a value system."
"It was a very badly broken company," says Bovender, who followed Frist back into the company. "We had major operational issues, because five companies had been jammed together without the infrastructure in place to manage them."
Frist revamped Columbia/HCA's board, established a new corporate ethics and compliance structure and sought to mend its broken ties to the rest of the industry.
Mac Thornton, chief counsel to HHS' inspector general from 1990 to 2002, says of Frist, "He brought in some people who had integrity and, although time will tell, it appears that he has been successful in completely turning the company around with respect to these problems."
Frist also oversaw the dismantling of Rick Scott's handiwork. In 1998, a block of 21 hospitals was sold to a consortium of not-for-profit hospitals. In 1999, Columbia/HCA spun off two new investor-owned hospital companies, Triad Hospitals, now based in Plano, Texas, and LifePoint Hospitals, Brentwood, Tenn., with a total of 56 hospitals.
All the while, negotiations continued with the government. If the settlement of the remaining civil allegations reached in December 2002 becomes final, HCA will have repaid more than $1.7 billion to the government.
Frist stepped down as CEO in 2001 and as chairman in 2002, leaving both titles for Bovender. By the time the U.S. Justice Department closed its criminal investigation of HCA, even critics of the for-profit model for hospitals were crediting Frist for his integrity.
Flying, philanthropy and humor
Frist continues to enjoy piloting planes, a love that he has shared with Bovender and others at HCA.
Frist and his family's Frist Foundation have been major supporters of Nashville and national charities. Locally, the Frist family was the driving force behind the Frist Center for the Visual Arts, which opened in April 2001. Nationally, Frist was on the board of the United Way of America from 1985 through 1996; he was the board's chairman in 1995. He also founded the national Alexis de Tocqueville Society in 1983. Named after the French author who chronicled social and political life in 19th century America, the society encourages local leaders in United Way chapters across the country to boost their contributions of time and money to the charity.
"He's got a great sense of humor," Bovender says. "He loves good jokes, even when they're on him. He's a person who is always optimistic, even at significantly bad events in his life.
"That optimism worked in 1997."