For-Profit Hospital Breakdown: What to Know About the 10 Largest Companies


So far this year, some of the biggest healthcare news headlines have come from the nation's for-profit hospital companies.

Mergers, acquisitions, joint ventures, lawsuits and everything in between have been carried out and observed across these companies. They stand to gain heavily from the Patient Protection and Affordable Care Act's provisions, such as Medicaid expansion and the health insurance mandate, and many have also led efforts in accountable care under healthcare reform.

As the healthcare world heads into September, here are some snippets of information to know about the 10 largest for-profit hospital operators in the country. Companies are presented in order by number of hospitals owned.

Hospital Corp. of America (Nashville, Tenn.)
Currently, Richard Bracken serves as CEO and chairman of HCA, the largest for-profit hospital company in the United States. However, in July, Mr. Bracken announced he would retire as CEO by the end of this year and would stay on as chairman through 2014. HCA President and CFO Milton Johnson will become HCA's new CEO.

HCA currently owns and operates 161 hospitals and 114 ambulatory surgery centers, although three more hospitals are potentially on the way. In July, HCA signed a definitive agreement with IASIS to acquire three Florida hospitals. HCA posted $1.6 billion in profit in 2012 and $33 billion in revenue. EBITDA in the past 12 months was roughly $6.6 billion.

HCA has been one of the largest hospital companies in the industry for the past decade. In 2006, Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch and family members of HCA co-founder Tommy Frist Jr., MD, completed a leveraged buyout of HCA for roughly $32 billion — a record at the time. HCA then went public again in 2010 with a $4.6 billion initial public offering. Over the past year, HCA has also been under scrutiny. Last August, the New York Times ran two investigative pieces that criticized the company's cardiac procedures and emergency department practices.

Community Health Systems (Franklin, Tenn.)
Wayne Smith serves as chairman, president and CEO of CHS and has been with the company since 1997. Larry Cash, executive vice president and CFO, has also been with CHS since 1997.

CHS has been one of the most active for-profit hospital operators in the past few months. At the end of July, CHS said it will acquire Health Management Associates in a deal valued at $7.6 billion. CHS currently has 135 hospitals within its portfolio, but if the merger is approved, it would become the largest for-profit hospital company in terms of number of hospitals. It ranks only behind HCA in terms of profit and revenue. In 2012, CHS recorded $265.6 million in net income and $13 billion in revenue.

CHS, founded in 1985, has experienced most of its growth over the past decade. In 2007, CHS bought Plano, Texas-based Triad Hospitals — a spinoff company of the former HCA/Columbia Healthcare — in a deal worth $6.8 billion, adding more than 50 hospitals to the company's base. CHS has also been flagged with federal investigations. The Department of Justice continues to look into CHS' Medicare short-stay admissions from emergency departments, an investigation that has been ongoing for more than two years.

Health Management Associates (Naples, Fla.)
Health Management's leadership has been in flux as of late. John Starcher Jr. currently serves as interim president and CEO, replacing Gary Newsome, who retired last month to become president of a Mormon mission in Uruguay. Kelly Curry is Health Management's CFO.

Of all the for-profit hospital companies, Health Management has been in the news the most throughout 2013. It all started in May when New York City-based hedge fund Glenview Capital Management upped its shares of Health Management to 14.6 percent, which in turn caused the company to implement a poison pill, a measure used against a potentially hostile takeover from a shareholder. Glenview said it had no intention to purchase Health Management, which owns 71 hospitals, and instead led a campaign to oust the hospital company's entire board of directors. Glenview won its battle, as a majority of shareholders voted to replace Health Management's board with Glenview's eight nominees.

In July, Health Management and CHS signed a definitive merger agreement in a move that shook up the hospital industry. Health Management's finances have been in a vulnerable position for several of the past quarters, which Glenview stated was its main reason for wanting to replace the board. In the first six months of 2013, Health Management's profit was down almost 60 percent. In FY 2012, Health Management's profit came in below target at $164.3 million on $5.9 billion in revenue.

LifePoint Hospitals (Brentwood, Tenn.)
Bill Carpenter was one of LifePoint's founders in 1999, and he currently acts at the company's chairman and CEO. Leif Murphy is LifePoint's new CFO. Mr. Murphy was named to the position in August after former CFO Jeff Sherman announced he was resigning for an undisclosed job in Dallas.

LifePoint currently owns 57 acute-care hospitals, and several other hospital acquisitions have been announced this year, including two small hospitals in Michigan and a small health system in Virginia. In FY 2012, LifePoint's profit totaled $151.9 million, while revenue reached $3.4 billion.

Most of LifePoint's hospitals are located in rural areas. However, the company has also formed major joint ventures with well-known systems over the past few years. The most famous is Duke LifePoint Healthcare, which is a partnership with Duke University Health System in Durham, N.C. Duke LifePoint has four hospitals under its purview. LifePoint also has a joint venture with Louisville, Ky.-based Norton Healthcare called The Regional Health Network of Kentucky and Southern Indiana.

Tenet Healthcare Corp. (Dallas)
Trevor Fetter serves as Tenet's president and CEO, roles he has held for more than a decade. Daniel Cancelmi is Tenet's CFO.

Tenet made a big move this summer when it announced it was buying Vanguard Health Systems in a deal worth $4.3 billion. The transaction is expected to close this year, and Tenet will own at least 79 hospitals and 157 ASCs and outpatient facilities. Tenet has also been improving its financial foundation. In FY 2012, the operator posted profit of $141 million and revenue of more than $9.1 billion.

The deal with Vanguard is the biggest transaction Tenet has made and signals a shift from the company's problems over the past 10 years. Several Tenet-owned facilities underwent investigations in the early 2000s for alleged unnecessary heart surgeries. In 2006, Tenet paid $900 million in cash and returned Medicare payments to settle claims it overbilled Medicare throughout the 1990s in one of the largest settlements ever recorded in the hospital sector. Tenet also went through a messy lawsuit with CHS a few years ago after CHS unsuccessfully attempted to take Tenet over.

Vanguard Health Systems (Nashville, Tenn.)
In 1997, Charles Martin Jr. founded Vanguard and still serves as the company's chairman, president and CEO. Phillip Roe, who has also been with Vanguard since its inception, serves as CFO and treasurer.

Vanguard, largely owned by New York City-based private equity firm Blackstone Group, currently owns 28 hospitals and has deals in place for several in Connecticut. However, they are likely to become affiliates of Tenet after the $4.3 billion merger deal is ratified. Vanguard just wrapped up its 2013 fiscal year, posting $61.9 million in profit, almost $6 billion in revenue and $555.5 million in adjusted EBITDA.

The company has spearheaded several joint ventures over the past few years, but few were as unique as the Minuteman Health Initiative. MHI is a CMS-approved Consumer Oriented and Operated Plan, which are nonprofit health insurers created under the PPACA. Vanguard created MHI with Boston-based Tufts Medical Center and New England Quality Care Alliance.

Universal Health Services (King of Prussia, Pa.)
Alan Miller founded UHS in 1978, and he still remains as the company's CEO and chairman today. Steve Filton has served as CFO of UHS since 2003 and has been with the company since 1985.

As of June 30, UHS owned and leased 23 acute-care hospitals and 182 behavioral health facilities. In fiscal year 2012, UHS recorded $443.4 million in profit and almost $7 billion in total revenue — but most of that came on the behavioral health side.

UHS has not successfully acquired an acute-care hospital in the past several years. In 2011, it attempted to acquire Knapp Medical Center in Weslaco, Texas, but that deal fell through in May 2012. In October 2012, UHS completed its sale of Auburn (Wash.) Regional Medical Center to MultiCare Health System in Tacoma, Wash. However, UHS is still one of the biggest players in the behavioral health market, especially after it bought Psychiatric Solutions in 2010.

Prime Healthcare Services (Ontario, Calif.)
Prem Reddy, MD, serves as Prime's chairman, president and CEO. He founded the company in 2001. Alan Smith is Prime's CFO and has been with the operator since 2006.

Prime has been one of the most active private, for-profit hospital companies over the past couple years. It has added hospitals located in Pennsylvania, Texas, Kansas and California, and Prime is in the process of buying several hospitals in New Jersey. Currently, Prime owns and operates 23 acute-care hospitals.

Over the past several years, Prime has also faced several state and federal investigations, some of which have stemmed from local news reports. For example, Prime has been probed by federal officials for allegations of overbilling Medicare for patients with septicemia and kwashiorkor, a rare malnutrition disorder.

IASIS Healthcare (Franklin, Tenn.)
Since 2010, Carl Whitmer has led IASIS as president and CEO. John Doyle serves as the company's CFO.

IASIS currently owns and operates 19 acute-care hospitals, but that number is set to drop by the end of this year. In July, IASIS agreed to sell its three hospitals in Florida to HCA for an undisclosed sum of money. In 2012, profit at IASIS totaled $22.9 million on $2.54 billion of revenue.

The past few years have been eventful for IASIS. At the end of 2011, a six-year whistleblower lawsuit against IASIS, which alleged the system used kickbacks to steer patient referrals, was dismissed. Its acquisition total has been low, but in August 2012, it announced a joint venture with Milwaukee-based Aurora Health Care. The Aurora-IASIS enterprise is focused around healthcare acquisitions, new construction, management of facilities and development of clinical services with an initial focus in Wisconsin and northern Illinois.

Capella Healthcare (Franklin, Tenn.)
Dan Slipkovich, CEO of chairman of Capella, cofounded the hospital operator in 2005 with the backing of GTCR, a Chicago-based private equity firm. Denise Warren serves as Capella's CFO and has also been with the company since its inception in 2005.

With 13 hospitals, Capella is one of the smallest for-profit hospital companies. Capella has not recorded a net profit since the beginning of 2012, and it has sold a few hospitals along the way. Capella and Chesterfield, Mo.-based Mercy discontinued talks this past June to merge their respective hospitals in Hot Springs, Ark.

However, Capella has started new initiatives. In May 2012, it finalized a partnership with Nashville, Tenn.-based Saint Thomas Health for joint ownership and operation of four hospitals scattered throughout middle Tennessee and southern Kentucky.

More Articles on For-Profit Hospitals:
How HMA Finds Itself at the Center of the Hospital Universe
9 Major For-Profit Hospital Companies Record $600M in Quarterly Earnings
Community Health Systems to Acquire HMA for $7.6B

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