Jon Lehman, associate dean for healthcare at the Owen Graduate School of Management at Vanderbilt University, says theres no better place than Nashville to start a healthcare services company. He should know, as he developed and later sold a company that provided cardiology and radiology imaging services to midsize hospitals before starting the healthcare MBA program at Owen. The sheer number of people with years of experience in healthcare services provides a useful vetting process for ideas in services.
The close-knit community, however, is less receptive to ideas outside of the services comfort zone, such as biotechnology or medical devices, Lehman says. Nashville knows what it knows, and it knows what it doesnt know, he says.
One advantage of the ties among these companies is that best practices tend to be spread around with the executives as they move from company to company, almost by default, Lehman adds.
Just around the corner
Hospitals and executives arent alone in moving from company to company. Many people at lower levels of the organizational chart do, too.
You can progress through your whole career without leaving Maryland Farms, says Paul Frankenberg, referring to the office park in Brentwood that is or has been home to, among others, Community Health Systems, LifePoint Hospitals and QHR, which is what the hospital management arm of Quorum Health Group is now called. Frankenberg is co-founder and president of Kraft Search Associates, an executive search firm in Nashville. Occasionally, Frankenberg says, executives lament that its a little too easy for employees to find jobs at other companies, but the flip side is that there is a deep talent pool in which to find a replacement.
Paul Dorsa is a good example. Dorsa earned a pharmacy degree at Xavier University in New Orleans and an MBA at Louisiana State University in Baton Rouge, and then worked for Humanas hospital division for two years before reaching his goal. I always wanted to work for HCA because, in all the literature, they were the company that you wanted to work for, Dorsa says.
Dorsa started working for HCA in 1984 as part of the hospital management unit that became Quorum Health Group when it was spun off in the late 80s. He eventually moved to Quorums corporate office in Brentwood to work on acquisitions. Dorsa stayed until another HCA spinoff, Triad Hospitals, bought Quorum in 2001. He went to work for Triads spinoff twin, LifePoint Hospitals, and then took a job about two years ago working on acquisitions for dialysis provider DaVita, El Segundo, Calif., but he didnt have to leave Brentwood, as DaVita has a regional office there.
In other words, from 1984 through 2005, Dorsa worked for HCA or one of its spinoffs.
Most of the for-profit companies have already gotten out of the business of owning dialysis centers, Dorsa says, so he doesnt do a lot of direct business with Nashville-area companies. But hospital CEOs he knows from working in Nashville tip him off to opportunities with not-for-profit hospitals often. He also got a call recently from a hospital CEO who used to work for HCA but now works for a not-for-profit hospital that wants to sell a dialysis center.
I know enough people that I can pick up the phone, make phone calls, ask questions and get answers, Dorsa says.
Hal Andrews works for another healthcare company with a Nashville presenceCogent Healthcarewhich provides hospitalist services to hospitals. Andrews, a senior vice president with Irvine, Calif.-based Cogent, got his start in Nashville healthcare as a lawyer at Waller Lansden, where, he says, even as a first-year associate he was working with Nashville giants such as Joel Gordon, founder of Surgical Care Affiliates. Andrews also worked in business development for privately held Essent Healthcare, Nashville, which operates five hospitals, and the Heritage Group, a Nashville-based healthcare investment and advisory firm.
Waller Lansden has graduated a handful of lawyers to the healthcare companies in town, Bishop says. Most prominent is LifePoints Carpenter. He got his start in healthcare as a Waller Lansden lawyer working on HCAs account, and then joined LifePoint as general counsel at its spinoff from HCA in 1999. He succeeded Ken Donahey as president and CEO in June 2006. When it came time to hire a new general counsel for LifePoint, Carpenter went back to his old firm and hired Paul Gilbert, who also holds the titles of senior vice president and secretary.
The Nashville office of accounting firm Ernst & Young tells a similar story of serving HCA and other Nashville healthcare companies and providing some of their executives, too. Most prominently, former Ernst & Young accountant Milton Johnson is HCAs executive vice president and chief financial officer. Another Ernst & Young alumnus, Michael Culotta, is CFO of LifePoint.
Jon Weaver, a partner and Southeast health sciences industry leader with Ernst & Young, says other veterans of his firm also work in one capacity or another at Ardent, Iasis Healthcare, HCA, Psychiatric Solutions and Vanguard. The firm cultivates these former co-workers, he says. One of the things that we do to try to keep connected with those folks is offer training programs to our alumni, friends and clients, Weaver says. We have a culture at Ernst & Young that celebrates professional growth, within the firm or without the firm.
Ernst & Youngs healthcare practice in Nashville got its startsurprise, surpriseworking with HCA around the time of its founding, Weaver says. The firm also has worked with spinoffs and other companies founded by HCA alumni. Today, the Nashville office of Ernst & Young has four partners working full time on healthcare accounts and three who work part time. Healthcare makes up about half of the business for the office, which includes 200 accountants, Weaver says.
As (HCAs) business grew, ours did as well, Weaver says. Our practice has grown the way Nashville has grown.