HOSPITAL FIRM OUSTS ITS FOUNDER; COLUMBIA/HCA TRIES TO STOP SLIDE.
Columbia/HCA, the nation's biggest hospital operator, ousted founder and CEO Richard Scott on Friday in a move aimed at repairing the firm's beleaguered image and halting the decline of its stock price.
Scott, 44, turned two struggling El Paso, Texas, hospitals into a $20 billion, 342-hospital giant in less than a decade. His company is the subject of a federal investigation into fraudulent Medicare billing practices.
Since the investigation began, Columbia/HCA stock has dropped more than 10 percent. The stock price fell 25 cents Friday to $35.94 a share.
Columbia/HCA is negotiating a merger with the second-largest for-profit hospital chain, Tenet Healthcare Corp., a Columbia official told the Daily News earlier this week. A merger would create a $30 billion, 475-hospital company that would control 8 percent of the U.S. hospital market.
Friday's shake-up at Columbia/HCA also claimed David Vandewater, who resigned as president and chief operating officer. Dr. Thomas Frist Jr., vice chairman, took over Scott's posts of chairman and chief executive officer. The Frist family started the Hospital Corp. of America; Columbia bought HCA in 1994.
``Though the decision to resign was an extremely difficult one, we consider it to be the ultimate demonstration of our commitment to Columbia's mission,'' Scott said.
Lynn Malkes, a health care investment analyst for Roney and Co. in Detroit, said the dismissal of Scott had long been anticipated by Wall Street and that the possible acquisition of Tenet is the real news.
``The company will not change. Columbia already has its corporate culture in place. The acquisition will make them huge and they can do a lot of things,'' she said, adding that she believes the federal investigation into Columbia/HCA will not hurt the company in the long run.
Columbia/HCA's tactic has been to gain a foothold in a market through the purchase of one or two hospitals and then to use its deep pockets to snatch up competitors until it dominates the market. This was the case in Nashville, Houston, Atlanta and several smaller markets.
The strategy was devised and perfected by Scott. His approach of severe cost-cutting, layoffs and aggressive advertising was applauded in the financial sector but disturbing to many doctors and state officials. Several state attorneys general are pursuing their own Columbia/HCA investigations.
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Jul 26, 1997|
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