Chairman of LV hospital operator to step down Jan. 1

Michelle Williams

Tuesday, July 31, 2001 | 10:30 a.m.

NASHVILLE, Tenn. -- Thomas F. Frist Jr., co-founder of HCA, said Monday he is stepping down as chairman of the nation's largest for-profit hospital chain, effective Jan. 1. Jack O. Bovender Jr., president and chief executive, will replace him.

Frist, 62, who returned as a top executive four years ago amid a management shake-up and a federal fraud investigation, said he and Bovender had successfully restructured the company -- a big player in the Las Vegas health care industry -- and that it was time for him to step aside.

"Initial goals have all been achieved, and the executive management team that we have put together over the past four years has led HCA to new levels of success," Frist said in a statement. "It is now time to begin an orderly transition of HCA's leadership team that will guide this company to even higher levels of achievement in the coming years."

Richard M. Bracken, president of HCA's Western Group, was promoted to chief operating officer, effective Monday. He will add president to his title once Bovender, 55, becomes chairman.

Samuel N. Hazen, chief financial officer for HCA's Western Group, will replace Bracken as division president.

Bovender said the appointments of Bracken and Hazen would allow them to take office before the company begins its annual planning and budgeting process for 2002.

Frist, the brother of U.S. Sen. Bill Frist, R-Tenn., said he would continue to work with management as a member of the HCA board and as one of the company's largest shareholders.

Health care industry analysts said the announcement shows the company is on track with its reorganization plan.

"It clearly indicates Tommy Frist thinks that what he had to come back to do has largely been accomplished," said Gary Taylor, an analyst with New York-based Banc of America Securities. "The company is now solid and financially stable. He doesn't need to be as actively involved as he was."

Frist and Bovender began a major restructuring after a federal fraud investigation caused profits and stock prices to tumble.

Richard L. Scott was ousted as chief executive in July 1997 and HCA got out of the home health care business. The company has since sold or consolidated more than 100 hospitals.

Two executives were convicted in Florida in 1999 of helping cheat federal health care programs out of $3 million in a complex billing scheme.

Last year HCA agreed to plead guilty to defrauding government health care programs and to pay more than $840 million in criminal fines, civil penalties and damages.

HCA posted second-quarter net income of $263 million last week, beating Wall Street's expectations.

Shares of HCA rose 55 cents to close at $45.48 in trading Monday on the New York Stock Exchange.

Taylor said the management plan also puts Bracken in line to replace Bovender, who came out of retirement in 1997 at Frist's request to help turn around the company.

"This lays out a long-term succession plan for the company," he said.

Bovender has worked in the health care industry for 31 years -- more than 20 years with HCA. In 1992 he was named executive vice president and chief operating officer of HCA. Following HCA's merger with Columbia in 1994, he left the company to serve on various public and private company boards. He returned in 1997 as president and chief operating officer. He was named to HCA's board in 1999.

Frist founded Hospital Corp. of America, or HCA, in Nashville in 1968 along with his father, the late Dr. Thomas F. Frist, Sr., and the late Jack C. Massey. He was named president in 1977, and a decade later became chairman, president and chief executive. Upon the merger with Columbia, Frist served as board chairman. In early 1995, he became vice chairman following the company's merger with HealthTrust. He returned to the company in 1997 as chairman and chief executive.

HCA owns and operates approximately 200 hospitals and other health care facilities in 24 states, England and Switzerland. The company is a big health care operator in Las Vegas with its Sunrise and MountainView hospitals.