HCA revival: Hospital company makes a profitable turnaround

The for-profit chain is back in the pink after the dark days of its massive Medicare fraud scandal.

By Katherine Vogt, AMNews staff. Oct. 20, 2003.

Just six years ago, HCA appeared to be on the brink of disaster. The nation's largest for-profit hospital chain was at the center of the government's largest-ever Medicare fraud investigation. It was ailing from an aggressive business strategy that left it bloated financially from acquisitions.

But after a change in leadership, massive corporate overhaul and payments of $1.7 billion to settle the Medicare fraud claims, to which the company admitted no wrongdoing, HCA has found the road to financial recovery. After a few years of transition, the company has acquired a small hospital chain in Kansas, posted profitable earnings and attracted high-powered investors, including Warren Buffet.

HCA also is becoming known for its hardball negotiating tactics with managed care companies, inspiring other large hospital systems to do the same. On the other hand, some outside observers say the company has backed off its previous hardball business tactics with physician partners, although physicians themselves are still eyeing HCA with caution.

"That reputation has lingered a little bit and has left us a hint of being unsure. But I think overall the company has tried to correct their wrongs, and they have made a lot of procedural changes, particularly with ethics and compliance, to not cast any further doubt about their past," said Gregory Neal, MD, a general surgeon at HCA's Skyline Medical Center in Nashville, Tenn., where he was chief of staff.