Health Care is Heart of Nashville Region
Published May 16, 2008
Vanderbilt University Medical Center dominates the skyline in the West End section of Nashville, and it continues to expand.
Health care companies based in the Nashville area employ an estimated 430,000 workers globally and more than 94,000 in Middle Tennessee alone. Let that sink in: Nashville is a significant player on the national and international health care stage.
“Health care is clearly one of the leading industry sectors in the Nashville economy, given the very dynamic and entrepreneurial health care companies that call Nashville home,” says Matt Gallivan, president of the Nashville Health Care Council, which in itself was a national trendsetter.
When the first-of-its-kind council was launched in 1995 under the umbrella of the Nashville Area Chamber of Commerce, it incorporated a broad swath of enterprises that included universities, hospitals, entrepreneurial startups, and professional services firms offering accounting, legal counsel, banking and architectural services.
“Literally, Nashville-based companies have created or fostered four new segments in the health care industry - hospital management, outpatient surgery, physician practice management and today leading the way in disease management,” Gallivan says.
He adds that health information technology and biopharmaceuticals are fast digging roots in Middle Tennessee. That’s on top of medical research efforts led by Vanderbilt University, the nation’s fastest-growing recipient of research funding from the National Institutes of Health.
Nashville is home to HCA, the Hospital Corporation of America, which introduced the concept of investor-owned health care in 1968. At the end of 2006, HCA operated 173 hospitals and 107 freestanding surgery centers in 20 states, England and Switzerland.
As the result of a merger in late 2006, a private investor group including the company’s leadership bought out shareholders and took the company private to the tune of $33 billion - the largest leveraged buyout ever.
The Nashville Health Care Council annually publishes a “family tree” of the more than 300 health care companies in the area, and about 150 of them are startups or spinoffs created by HCA alumni.
As of late 2006, 20 Nashville health care companies were publicly traded on Wall Street, with combined revenue for the year of nearly $70 billion. “That underscores the pervasive, strong presence that Nashville companies have on a national level,” Gallivan says.
One standout among many is Healthways Inc., which was founded in 1981 to own and manage hospitals. Today, the company employs nearly 3,000 and pursues a mission to help patients manage disease for better health and lower costs.
Dennis Jackson, a Healthways vice president, says the company employs “a telephonic approach,” putting registered nurses on the phone in 10 call centers across the country to encourage and advise patients on behalf of health plans, hospitals and employers.
Healthways’ growth has been “double digit for the last three or four years,” Jackson says, adding that he doesn’t expect it to slow.
Psychiatric Solutions Inc. is another Nashville phenomenon, founded in 1996 and today competing with two other companies for national dominance in inpatient psychiatric care. The company owns or leases 75 free-standing facilities.
Making national business headlines in 2006 and through the first quarter of 2007 was Nashville-based Caremark Rx Inc., the world’s second-largest pharmaceutical services company. It was acquired by CVS Corp., the nation’s largest pharmacy chain, for $27 billion. The Caremark portion of what is now CVS/Caremark Corp. continues to operate from downtown Nashville.
Gallivan says Nashville should maintain its health care dominance because of three “hallmarks”: the health care management expertise of Nashvillians, the access to capital and the professional support services available to the industry.
National trends, including an aging population, should contribute to companies’ success. “Prospects for the health care industry in Nashville remain very strong,” he says. “With the entrepreneurial and management expertise here in Nashville, the industry should continue to prosper here and be one of the leading contributors to the strength of the local economy.”
Story by Sharon H. Fitzgerald
Photo by Vanderbilt Medical Art Group
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