This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

HCA: Management Reform Needed

NEW YORK (TheStreet) -- Hospital Corp. of America (HCA) is unique among American businesses for giving us not one, but two Republican political leaders -- former Senate Majority Leader Bill Frist and current Florida Governor Rick Scott.

Frist, a transplant surgeon as well as a legislative deal-cutter, is the son of HCA co-founder Dr. Thomas Frist; his brother, Dr. Thomas Frist Jr., was twice chairman of the company, eventually leading a private buyout in 2006 by KKR valuing it at $33 billion, according to a company history.

Scott sold his Columbia Hospital Corp to HCA in 1993, leaving as chairman in 1997 with cash and stock worth about $360 million, according to Wikipedia. Scott was called an "icon of greed" in a 1995 piece by the Healthcare Forum Journal, and he left under a cloud of investigation that eventually led to huge fines against the company.

All this was known to Florida voters when they elected him governor in 2010.

Although HCA has made some people fabulously wealthy and others very powerful, public shareholders haven't always shared equally. HCA was a good stock in the 1980s but has since gone private twice and public three times. Private equity has done very well in the buyouts, tripling their money in the last one, according to a New York Times profile of the company last year.

Right now the stock is on the rise, up 24% since coming back to the market in 2011 and paying out $8.50 a share in dividends since then. But the government has also collected $1.7 billion in Medicare fraud fines from the company over the years, according to Investment Watchdog, with the initial case -- estimated at $840 million in 2000 -- causing Forbes to call the stock a "disaster."


It's great for the people at the top. Current CEO Richard Bracken reports total income of over $46 million for the most recent fiscal year, notes Reuters, with President Milton Johnson bringing in over $27 million, almost all of it from stock.

It's also good for construction workers. HCA is presently building a new $900 million headquarters in Nashville, twin 22-story skyscrapers, due for completion in 2015. Meanwhile, HCA has gone through repeated strikes and strike threats, most recently last month in San Jose, Calif., as the San Jose Mercury News reported.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,982.59 +22.02 0.13%
S&P 500 1,978.91 +0.57 0.03%
NASDAQ 4,444.9090 -4.6550 -0.10%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs