CHS, Prime, HCA, Tenet: 4 of the most interesting and successful CEOS, a comparative review

The CEOs of healthcare giants CHS, Prime Healthcare, HCA and Tenet are among the most successful of their time. The following is an overview of the executives' background, compensation, education and more.

 

 

CEO

System

Age

Total value of stock options

Core compensation

Tenure with company

Education

Wayne T. Smith

CHS

68

$16,146,947

2014 Salary: $1,500,000

Total calculated compensation in FY 2014: $26,441,382

18 years

BS, MS from Auburn University, MS in healthcare administration from Trinity University

Prem Reddy, MD

Prime Healthcare

67

N/A

N/A

14 years

Christian Medical College, in Vellore, Tamil Nadu, India.

R. Milton Johnson

HCA

57

$176,282,686

Salary: $1,099,979

Total calculated compensation in FY 2014: $14,625,513

33 years

BA in accounting from Belmont University

Trevor Fetter

Tenet

54

$33,628,713

Salary: $1,250,000

Total calculated compensation FY 2014: $17,950,107

13 years

BA in economics from Stanford University and an MBA from Harvard Business School

 

Note: The information included in this table is from each CEO's executive profile on Bloomberg Business.

 

Wayne T. Smith
President, CEO and chairman of the board of Community Health Systems

Wayne T. Smith joined Franklin, Tenn.-based Community Health Systems in 1997 as president and CEO and became chairman of the board four years later in 2001. He is a current board member and past-chair of the Nashville Area Chamber of Commerce, the Federation of American Hospitals and the Nashville Health Care Council. Mr. Smith also serves on the board of directors for Praxair and the board of trustees at his alma mater Auburn (Ala.) University.

Prior to joining CHS, Mr. Smith served as president and COO of Humana, where he spent 23 years of his career, after answering a newspaper want ad for a position with the Louisville, Ky.-based insurer. Before starting his career in healthcare, Mr. Smith served as a captain in the Army.

Mr. Smith earned his bachelor's degree in physical education and his master's in school administration from Auburn (Ala.) University, which bestowed him with the Lifetime Achievement Award in March 2011. He later went on to earn a master's in healthcare administration from San Antonio-based Trinity University.

During his tenure at CHS, Mr. Smith led one of the industry's strongest records of annual compound growth, bringing net revenue from $742 million in 1997 to more than $13 billion in 2010, according to Auburn. The company reported more than $18.6 billion in net revenue in fiscal year 2014. This growth was achieved primarily through acquisitions and improved operations.

Mr. Smith led the system through a series of small- and large-scale acquisitions, most notably the 2007 acquisition of Plano, Texas-based Triad Hospitals, which nearly doubled the size of the organization with the addition of more than 50 hospitals, and the January 2014 acquisition of Naples, Fla.-based Health Management Associates, which added about 70 hospitals to the system.

"We are very pleased to complete this important strategic acquisition and welcome our newly affiliated hospitals and their physicians and employees to our organization," Mr. Smith said in a statement on the HMA acquisition. "This transaction provides us with increased scale and broader geographic reach as we work to create strong healthcare networks across the nation. Our larger organization is well positioned to address the changing dynamics in our industry and dedicated to providing quality care for millions of patients and all the communities we serve. We look forward to effectively integrating this acquisition and generating significant value for our shareholders."

Now, CHS includes more than 200 hospitals in 29 states, employs 135,000 staff and 22,000 physicians, making it the country's largest hospital operator by acute care facilities.

Mr. Smith was seen recently at the 2015 Nashville Health Care Council moderating the annual panel, "Wall Street's view on the Prospects of the Healthcare Industry," according to Nashville Business Journal. Mr. Smith commented on the King v. Burwell case, saying, "Clearly this is an issue that affects everyone. Everyone has an interest in solving this. No one wants to take health insurance away from 6 or 8 million."

Prem Reddy, MD
Founder, chairman, president and CEO of Prime Healthcare

Prem Reddy, MD, is the founder, chairman, president and CEO of Ontario, Calif.-based Prime Healthcare. He founded Prime Healthcare Services in 2001, and later became its CEO in 2012, following the resignation of his brother-in-law, Lex Reddy. He is a fellow of the American College of Cardiology and the American College of Chest Physicians.

Dr. Reddy was born and raised in India and attended the Christian Medical College in Vellore, Tamil Nadu, India. He later moved to the United States to complete his residency training in internal medicine and cardiovascular disease at the Down State Medical Center, SUNY, based in New York City.

After finishing his residency, Dr. Reddy moved to the High Desert area of California, where he established a medical practice and treated patients for 25 years. In this time, he performed more than 5,000 cardiac procedures.

He then went on to establish the 83-bed Victorville, Calif.-based Desert Valley Hospital in 1994. He sold the hospital to establish Prime Healthcare Services in 2001 and then later bought it back with the Desert Valley Medical Group.

Just 14 years later, the system now owns and operates 34 hospitals in 11 states and has been recognized as one of the nation's Top 15 Health Systems three times by Truven Health Analytics. The system has never sold or closed a hospital.

Most recently, Dr. Reddy has led the acquisition of Mesquite, Texas-based Dallas Regional Medical Center and Gadsden, Ala.-based Riverview Regional Medical Center, and the hospitals' outpatient services. Prime was also recently forced to withdraw its purchase offer of the six Daughters of Charity Health System hospitals, which was losing over $150 million annually.

"Prime Healthcare has been committed to saving the six struggling DCHS hospitals and securing their mission of care, just as we have done for 34 financially distressed hospitals across the country," Dr. Reddy said in a statement. "Unfortunately, the conditions placed on the sale by the California Attorney General are so burdensome and restrictive that it would be impossible for Prime Healthcare — or any buyer — to make the changes needed to operate and save these hospitals."

In 2012, Dr. Reddy was awarded the Golden Achievement Award by the Boys & Girls Club of Greater San Diego in 2012 for his philanthropic work in the community. He established the Dr. Prem Reddy Family Foundation in 1989 to serve the community with a public health library, a scholarship program for students pursuing degrees in healthcare and providing support for other healthcare-related charities. He also founded the Prime Healthcare Foundation, through which he donated $40 million in 2014 to build a nonprofit medical school in California, to be named the California University of Science and Medicine.

"I want to impress upon fellow immigrant citizens and especially minorities that the 'American Dream' is still alive and achievable," Dr. Reddy told the India Tribune in a phone interview in 2003. "This great nation of ours gives everyone the opportunity to accomplish his or her fullest potential and I am a clear testimony to this belief of mine."

R. Milton Johnson
Chairman and CEO of Hospital Corporation of America

R. Milton Johnson chairman and CEO of Nashville, Tenn.-based Hospital Corporation of America, began his 33-year career in healthcare at HCA in 1982. Previously, Mr. Johnson worked as a CPA at Ernst & Young. After a series of promotions at HCA — including serving as head of the company's tax department, senior vice president and controller, executive vice president and CFO — he became president of HCA in 2011. In January 2014, Mr. Johnson was named CEO. Additionally, he serves as chairman on HCA's board of directors.

"I was with what is now Ernst & Young, and had spent a couple of years working with HCA's accountants, so I'd been walking the halls over here since 1980," Mr. Johnson said in a 2014 interview with HCA Today, HCA's official blog page.

At the helm of HCA, worth nearly $36 billion, Mr. Johnson leads the system's approximately 166 hospitals, 113 freestanding surgery centers and more than 35,000 affiliated physicians in 20 states as well as the United Kingdom. HCA has an overall staff of approximately 220,000, of which about 35 percent are registered nurses.

Under Mr. Johnson's leadership, HCA has achieved substantial clinical improvements. In 2013, 85 percent of HCA's hospitals reporting core measure performance data to The Joint Commission were included in its "Top Performers" list. In comparison, just over one-third of all TJC-accredited hospitals are named to the list.

"Top of the list of things we need to do for the future is improve the patient experience and improve quality," Mr. Johnson told HCA Today. "A quality outcome is of paramount importance, but a higher awareness of what the patient is going through while we are achieving those great outcomes is important as well. It comes down to compassionate care. Are we communicating well? Are we managing a patient's pain well? Are we keeping our facilities clean? Are we making sure we have the best equipment? All these things are contributing to the patient experience, and playing an important role in where the patients choose to go for their healthcare."

The system has also grown significantly since Mr. Johnson became president and CEO. During the JP Morgan Healthcare Conference in January in San Francisco, Mr. Johnson noted the company has acquired 15 hospitals since 2011, adding up to 3,900 additional beds. At the conference, HCA CFO Bill Rutherford said the system is open to new acquisitions, and plans to assess two to three purchases this year.

HCA is a public proponent of the Patient Protection and Affordable Care Act. In February, it filed a friend-of-the-court brief in King v. Burwell, the case that will determine whether people in states with federal-run exchanges are eligible for insurance subsidies under the healthcare law. In its brief, HCA showed strong support for keeping health insurance subsidies in all states, saying the petitioners' legal theory in the case would lead to "absurd consequences."

In March, HCA was named one of the world's most ethical healthcare companies in 2015 by Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices.

In September 2014, HCA donated $1 million to the Centers of Disease Control and Prevention Foundation's Global Disaster Response Fund to help support the international Ebola epidemic response efforts in West Africa.

"Ebola continues to spread rapidly in West Africa, and CDC and others have made it clear that the window of opportunity to contain the virus is closing quickly," Mr. Johnson said in a statement. "The time to act is now, and we strongly encourage other companies, particularly those in the healthcare industry, to join us in this important effort to save lives."

HCA is a regular supporter of global relief efforts, including those following the tsunami in Indonesia, Hurricane Katrina, the earthquake in Haiti and Typhoon Haiyan in the Philippines.

Trevor Fetter
President and CEO of Tenet Healthcare

Trevor Fetter became Dallas-based Tenet Healthcare's president in November 2002 and was appointed CEO in September 2003. Before landing Tenet's top seat, Mr. Fetter served in various executive roles for Tenet and other organizations.

Mr. Fetter began his career in 1986 with Merrill Lynch Capital Markets, where he focused on corporate finance and advisory services for the healthcare and entertainment industries. In 1988, he joined Metro-Goldwyn-Mayer Studios where he eventually rose to executive vice president and CFO. Mr. Fetter first joined Tenet in 1995. Between then and 2000, he served in several senior management positions, including CFO. He left in March 2000 to serve as chairman and CEO of Broadlane, a supply chain services company based in Dallas, until November 2002 when he returned to Tenet as president.

When Mr. Fetter picked up his duties as president of Tenet in 2002, the system was in a crisis. Tenet, which was at the time based in Santa Barbara, Calif., was reeling from a series of Medicare billing scandals. Among the worst allegations were claims that physicians in one Tenet hospital were performing unnecessary heart surgeries and that Tenet paid physicians illegal kickbacks for patient referrals, according to the Dallas publication D Magazine.

By 2003, Mr. Fetter's predecessor, Jeff Barbakow, had fired the CFO and COO. With his own position in jeopardy, Mr. Barbakow left six months later.

"In mid-2003, the largely new board appointed me acting CEO and launched a search for a permanent CEO. Looking back, I think the reality was that nobody else particularly wanted the job," Mr. Fetter explained in a March interview with The Advisory Board Company. "It was a very difficult time for the company, but I was up for the challenge, and I appreciated both the board's confidence in naming me as permanent CEO and the strong support they provided as I implemented the changes that needed to be made at Tenet."

To resolve the allegations, including those that Tenet overcharged Medicare, Tenet reached a $900 million settlement with the federal government, according to D Magazine.

Despite the harrowing path to recovery that lay before Tenet, Mr. Fetter said the challenge energized him. The causes of the issues at Tenet were the result of the bad decisions of a small number of people, while tens of thousands of other workers did nothing wrong, he told The Advisory Board Company. He saw Tenet's recovery as the chance to restore the integrity and rebuild the company's reputation, establish industry-leading quality measures and corporate governance best practices.

From about 2006 to 2012, Tenet's strategy was one focused on "organic growth," Mr. Fetter told The Advisory Board Company. Especially since the economy has begun recovering since the recession over the last four years, Mr. Fetter has put Tenet on a track toward expansion. In October 2014, it acquired Nashville, Tenn.-based Vanguard Health System for $4.3 billion, bolstering Tenet up to include 77 acute care hospitals, 173 outpatient centers, 100,000 employees and annual revenue of $15 to $16 billion, according to D Magazine.

"I'd characterize our strategy now as developing our ambulatory and services business, and further developing our core acute care business, but not through acquisitions alone," Mr. Fetter told The Advisory Board Company. "That's a tool that's available to us, but we're much more interested in expanding and solidifying our geographic footprint through innovative partnerships with well-respected not-for-profit organizations."

 

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