“Health Care Council gets high marks on report card”

Nashville Business Journal, by Bill Hobbs, May 22, 1998

As the Nashville Health Care Council approaches its third birthday, organizers can put a check mark beside some of the recommendations made in an initial survey that led to the creation of the council.

The survey, conducted in 1995 by Louden & Co., a health care business consulting firm that has since moved from Nashville to Chicago, was not the ultimate strategic plan for the NHCC. But the report did identify problems health care executives at the time said could be solved.

Three years later, the industry and the Council can say many items on the list have been addressed successfully.

"This wasn't the plan that drove the council for its first two years," says Matt Gallivan, executive director of the Council, "but it was a launching point."

Gallivan, who replaced founding executive director Laura Campbell last year, says progress has been made in several areas identified as "weaknesses" by the Louden & Co. report.

Among them:

• Nashville's health care industry is rapidly diversifying into new niches, and venture capital is plentiful.
• The perception outside Nashville that the city's health care industry is mostly Columbia/HCA and hospital management company deals has been altered positively.
• Where the city had no health care-focused graduate business program three years ago, today both Belmont University and Vanderbilt University have established health care MBA programs at their business schools.
• Communication among various health care businesses and their executives has increased, partly through planned seminars and events put on by the Health Care Council.

Evidence of progress is in the numbers:

From 1995 through 1997, about $750 million in venture capital was invested in Nashville-based health care start-ups, Gallivan says. That's "about 25 percent of all venture capital invested in health care services in the U.S." in those three years, he says.
And, while hospital management companies are an obvious Nashville strength that dates back to the founding of Hospital Corporation of America (now Columbia/HCA), health care industry is growing more diverse, he says.

"It's been growing very strongly across a number of areas."

The city is home to about 25 physician practice management companies, "which is probably the largest grouping of PPMs in the country," Gallivan says. Nashville also boasts 18 hospital management companies, and is seeing growth in both biotechnology and health care-related information technology companies.

"We count approximately 21 companies in the information technology area," Gallivan says. "I think we've got a number of companies emerging in that sector, looking at using various types of technology such as the Internet" in health care.

The Council, which just sponsored a day-long seminar on challenges facing biotech and medical technology companies, may plan a similar seminar for the health care-related information technology sector, Gallivan says.

The biotech seminar was designed to bring together various people who might, together, build a stronger base of biotechnology companies in Nashville, he says. "We've got a ton of venture capital floating around this town, got some great research being done at Vanderbilt, and a lot of great service providers here (that can be brought together) to create a critical mass."

The outside world's narrow perception of the strength and breadth of Nashville's health care industry was another area of weakness identified in the Louden & Co. study.

"We've received a lot of national recognition through a variety of publications," says Campbell, who left the Council to form Laura Campbell & Associates. She consults with start-up health care ventures.

While some press coverage has focused on the widespread federal fraud investigation that hobbled the once rapidly-growing Columbia/HCA, other media reports "have been very positive and reflected the diversity of the health care community," she says.

The Louden study also focused on the city's lack of a "well-known, high-caliber health care MBA or executive program" as a weakness.

Three years later, there are new health care MBA programs at Belmont's Massey School of Business and Vanderbilt's Owen Graduate School of Management.

"From a Nashville standpoint, having a quality MBA program is extremely important in developing our health care work force here," Campbell says. "From a national standpoint, it draws attention to the high caliber of health care businesses and executives in the area."

Members of the Health Care Council have played an advisory role with both universities in creating their MBA programs, Gallivan says.

Campbell says another need that drove the formation of the Council was to increase networking opportunities and communication among area health care business executives.

"Traditionally, a lot of health-care networking has been done around Nashville's country clubs," she says. "As the health care community has grown and expanded, it's more and more important to provide a formal structure for integrating the new companies and executives into the health care community."

The Council's seminars and workshops achieve that goal, Gallivan says. "When you have meetings that attract 400 people, I think you do have increased communication."
Not every issue spotlighted by the consultants' study three years ago has seen unqualified improvement. The report cited as problems a reduction in air transportation flights, a housing shortage, low unemployment and the perception that public schools are not up-to-par with private schools.

Since then, American Airlines closed its Nashville hub, though the slack has been taken up by other carriers, mostly by the low-fare, no-frills Southwest Airlines. Housing construction has boomed, but so have housing prices. The region's labor shortage has worsened and the city's public education system is still saddled with the effects of a decades-old desegregation lawsuit.

Perhaps the consultants' most prescient statement in the report was in regards to Columbia/HCA. After first noting that the decision by Columbia to base itself in Nashville after acquiring HCA had solidified the city's status as the home of the for-profit health care industry, the report sounded a cautionary note:

"Columbia/HCA can set the tone, which is great when it is doing well, but could create a negative impact if it has challenges," the report said. Three years later, Columbia is mired in a federal Medicare fraud investigation, recently reported a $1 billion-plus loss and is making news by rapidly selling off various hospitals and divisions.

Gallivan and Campbell both note that the Health Care Council has less influence over some issues, such as air service, than other parts of the consultants' wish list.
While the Heath Care Council can point to successes and improvements now, the consultants three years ago found that some area health care executives were skeptical that anything would come of the project.

"A number of individuals expressed their concern and skepticism whether anything specific would happen as a result of yet another study," the report says. "Several executives indicated that if specific actions were not forthcoming from this study, they would be unlikely to take time again to support future planning efforts."

That "wait and see" attitude was clear to the Council's founders, Campbell says. So, as the founders created the strategic plan for the Council, they submitted it to their target membership for their comments.

"We went out basically to see if the ideas for the health care council would be accepted by the community, and whether there would be financial support," she recalls. "Pretty quickly, we pulled together about $1.5 million in funding."