HCA’s Thomas Frist: More opportunities now than ever for health care entrepreneurs (Nashville Business Journal)
It was 1968. Medicare had been created three years earlier, putting pressure on an already stressed U.S. health care system – especially in the Southeast, which was experiencing a population boom thanks in large part to the advent of air conditioning.
Enter Hospital Corporation of America, the Nashville hospital company better known today as HCA Inc. It was among the nation’s first for-profit hospital companies, setting out to prove that health care could be both effective and efficient.
“A societal need developed, and some of us seized the moment when that happened,” said Dr. Thomas Frist Jr., co-founder and chairman emeritus of HCA, which today is the largest investor-owned hospital company with 163 hospitals in 20 states in England. “And why were we there to do it? We happened to be, some of us, there at the right time.”
The current climate is not unlike the 1960s in terms of rapid change and the opportunities that creates.
“I think there’s going to be great opportunities for entrepreneurs with what’s going on with health care reform, and I would urge you to stay on top of anything that can help manage costs. It’s going to be a winner,” said Clayton McWhorter, chairman of health care venture capital firm Clayton Associates LLC and a former HCA executive who founded HealthTrust Inc. in 1987.
The opportunities today are “unbelievable,” said Joel Gordon, co-founder of hospital company General Care Corp. and outpatient surgery company Surgical Care Affiliates.
Gordon also is widely credited as having saved Birmingham, Ala.-based HealthSouth Corp. from bankruptcy following a corporate accounting scandal in 2002.
“When you go back to 1965 when Medicare was passed, everybody said that’s going to be the death of health care. But it really was what brought health care where it is today,” Gordon said, noting that in the four years following Medicare’s passage, hospitalizations of Americans over age 65 quadrupled. “That’s really what drove health care. Now, with 30 million people coming into the system, there’s going to be so many opportunities.”
Charlie Martin, chairman and CEO of Nashville-based Vanguard Health Systems and co-founder of hospital management company OrNda HealthCorp., said health care is at the “top of a lot people’s agenda” at the moment.
And while many argue that the system is broken, Martin said it’s working exactly as it’s designed to work: The more services you provide, the more money you make.
“We tend to do things to people, not for people, because that’s what we get paid for,” Martin said.
The solution, Martin said, will come from a new kind of company, one that not only treats the sick, but helps people stay well and rewards outcomes, not volume of service.
It’s an exciting time to be in health care, Frist said. People often tell him they wished they’d been at HCA in the 1970s when the company was undergoing rapid growth, or in the 1980s when HCA spun off HealthTrust and completed what was at the time the largest management-led leveraged buyout in history.
“I think today there are more opportunities than really, seriously any time in my lifetime,” Frist said. “I don’t know exactly what they are … but you need to keep your ears and eyes open.”
