HCA IPO Could Generate New Class of Entrepreneurs

At his home office in Nashville, former HCA executive Doug Smith looks over the company’s family tree.

The Wall Street Journal estimates 1,400 HCA employees received equity in the company when it was taken private in 2006. As shares hit the New York Stock Exchange tomorrow/today, many could begin cashing out and moving on to other ventures.

HCA has been down this road before, as CEO Richard Bracken explains in a sales pitch to investors.

“We are delighted to be in a position to take this public, for the third time.”

Previous initial public offerings of stock spawned a series of spinoffs and start ups by company officers. The latest report from the Nashville Health Care Council shows more than 150 companies with ties to HCA.

Doug Smith is just one example. He and a team of executives left in 1989 to manage Quorum Health, which was previously a division of HCA. Years later Smith was the founding investor in a company called Passport Health, and he continues to invest in health care companies.

“That’s the way a lot of this works. People have resources. They continue to be interested and involved and have ideas, so they start other businesses and it’s been an amazing story in Nashville.”

Smith says he expects the cycle to continue, and he predicts some of the new companies will move into the biomedical arena, a subfield without a heavy presence in Nashville.

Doug Smith says it’s not just the health care industry that’s gained from HCA IPOs. He describes the benefit to Nashville non-profits.

[audio:https://nashvillepublicmedia.org/wp-content/uploads/2011/03/hca-philanthropy.mp3]

Making the most from HCA’s stock offering this week will be the company’s founders. The Frist Family helped take HCA private in 2006 by putting nearly a billion dollars into the buyout. That investment has more than doubled. Former CEO Jack Bovender reportedly stands to receive more than $6 million and still own 2.5 million shares in the company.