I Remember Rick Scott: A Great Makeover, but Still the Same Guy Part-1

Summary: When I wrote Money-Driven Medicine, the Real Reason Health Care Costs So Much (Harper Collins, 2006),  Rick Scott stood out as one of the more memorable characters in a  rogues’ gallery of CEOs who helped create the stock market bubble of the 1990s.

This week, Rick Scott beat Florida Attorney General Bill McCollumn to win the Republican party’s nomination for governor, shattering campaign spending records by investing $50 million of his own money in the race.  Yesterday, in an interview with CNN, Scott said there is no limit on how much of his own money he would spend in the upcoming election.

The citizens of Florida might want to ask: Where did that money come from?

I first met Scott in the early 1990s, when he had just been named CEO of Columbia/HCA, a for-profit hospital chain that would makes its reputation  as a serial acquirer, gobbling up other hospitals to become one of the biggest health care companies in the world.  At the time, I was mystified:  Scott had no experience in the health-care industry, and didn’t appear to be CEO material.

I had been sent to profile Scott for Barron’s, and was expecting to meet an “up and comer.”  But when I looked into his eyes, it was like trying to look into the windows of an empty house, late at night. No lights on. No one at home. Who was this man? Why had Dr.Thomas Frist  Jr., co-founder of Hospital Corporation of America (HCA) (and the brother of former Senate Majority Leader Bill Frist)  chosen him for this job?

By the time I wrote Money-Driven Medicine in 2006, I understood. While running HCA/Columbia, Scott would preside over the biggest Medicare fraud scheme in U.S. history.  In 1997, the FBI raided HCA/Columbia offices in seven states. A few days later, the Board of Directors ousted Scott.  Ultimately the company pled guilty to no fewer than 14 felonies and paid a total of $1.7 billion in criminal and civil fines. Scott was never charged with any wrong-doing. As I explain in the book, it’s very likely that he knew too much. Scott waltzed away with a $9.88 million severance package, along with 10 million shares of stock worth up to $300 million at the time.”

The fallen CEO “retreated into finance, starting the investment firm Richard L. Scott Investments in Connecticut, that bought stakes in a variety of industries, including a TV network devoted to health news . . .  But he clearly wanted to reestablish himself as a healthcare player.”  Tristram Korten later reported in Salon.

And in 2001, he did just that, funding a chain of retail health clinics, headquartered in Jacksonville, Florida, that targeted uninsured and underinsured patients able to pay cash for their care.

I lost track of Scott after I wrote about him in Money-Driven Medicine. But three years later, in March of 2009,  he surfaced, running a multimillion-dollar campaign for a group that called itself “Conservatives for Patients’ Rights.” Its goal was to kill health care reform. Scott saw his Solantic clinics as the ideal market solution to the woes of the uninsured. So what if the clinics provided no continuity of care? They were cheap– or at least the prices per treatment appeared low. Critics charge that they prescribe unncessary drugs. 

Scott had seeded “Conservatives for Patient Rights” with $5 million of his own cash. I was surprised that he had survived the fall of Columbia/HCA and was now seen as a health care “expert.”  Mainstream publications such as the Wall Street Journal were reporting on his activities—without bothering to mention that he was tossed out of the company after it was charged with Medicare fraud. (In the news cycle, twelve years is a long time. Most of the reporters writing about Scott in the spring of 2009 had probably never heard of the scandal.) Shocked, I explained who Rick Scott was here on HealthBeat in a post titled “Who is Richard Scott, and Why Is He Saying These Things About Health Reform?”.

A year ago, I was startled to find Scott back in the news.  This year, I more than surprised; I was thunder-struck when I discovered that Rick Scott was running in the Republican primary to become  governor of Florida. In May, I wrote a HealthBeat post about his candidacy, predicting that he might even win.

He did. This is why I have decided to take another crack at the story. It is essential that everyone—whether conservative or liberal—understand who Scott is, and the role he played, not  only in the health care industry, but in the financial debacle of the 1990s, kiting a stock by taking over hospitals, downsizing nursing staffs,  paying kickbacks to doctors, bilking Medicare, and allegedly putting patients’ lives at risk. 

Now, questions are being raised about his Solantic clinics.

When I first met Rick Scott in the early 1990s, he had hair. Scott, as you probably know, is the super-conservative, whip-thin, bald-as-Bruce -Willis politician who has just become the Republican nominee in Florida’s gubernatorial race.  When accepting the nomination, Scott referred to himself as “the good looking bald guy.”  And I have to say, he is much better looking today than he was when I met him in 1994.

At the time, Scott was a remarkably non-descript, slightly hang-dog 41-year-old who had  just landed a big job as CEO of Columbia/HCA Healthcare Corp.  By 1996, it would be the nation’s 10th largest employer, with some 240,000 employees

A for-profit hospital chain, Columbia/HCA was the offspring of a merger between Columbia Health Care (a company Scott had forged with the help of Texas financier Richard Rainwater)  and Hospital Corporation of America (created by  the father and son team Dr. Thomas Frist Sr.and  Dr Thomas Frist  Jr., along with Jack Massey, the promoter who turned Harland Sander’s recipe for Kentucky fried chicken into a fast-food emporium.)  For-hospital hospitals were a hot ticket on Wall Street and tended to attract a somewhat motley crew of investor/entrepreneurs.

In 1994, I was Barron’s senior editor, and had flown down to Louisville, Kentucky, in order to write a profile of Scott, a supposedly dynamic, up and coming CEO. (A year later, Scott would move the company to Nashville)

Usually, someone who runs a growth company like HCA/Columbia possesses a larger-than life personality, powered by ambition that sucks all of the oxygen out of a room. He may not be brilliant, but you understand how he got where he is. But when I got to Louisville, I found a lean, pale man with a receding hairline and a hungry look, the grown version of the boy who had grown up in Kansas City, Missouri, where his mother helped support five children by selling encyclopedias door-to-door, doing other people’s laundry, cleaning telephone booths and clerking at J.C. Penney.

Gangly, he looked young for his age, even boyish, but not in a happy way.  ”According to his mother, if you went to Boy Scout camp with him, he was the boy who would do your chores for a fee. If you were in the Navy with him, he was the young married guy who took correspondence courses and brought cases of soda on board ship to sell by the can for a profit. If you knew him at the University of Missouri, he was the guy in college on scholarships and the G.I. Bill who managed to buy a donut shop with a friend,” Joe Flower reported in the Health Care Forum Journal

Heart sinking, I realized I was going to have to change the focus of my story. Barron’s had a new editor-in-chief who wanted “positive stories.” He expected a glowing cover story about a celebrity CEO.  But Scott didn’t fit the part.

Today,  Scott the candidate seems somewhat manic; back then he appeared slightly depressed. I remember thinking : he could easily be  a motel manager. Image001

“Rick Scott” 2010, picture from his campaign site

Worst of all, from a writer’s point of view, Scott wasn’t particularly quotable. I was there to profile him,  and his idea of an entertaining anecdote was to talk about how everyone who worked for him made fun of him for driving an old, broken-down car. I waited for the punch-line. “I’m cheap,” he explained.  Indeed, he was frugal, and no doubt, a hard worker. But that wasn’t a cover story.

Meanwhile, I couldn’t figure out why Scott had been chosen to run Columbia/HCA. That was the puzzle, and instinct told me it was the key to a real story. He made me uneasy. When explaining to my editor why I couldnt' write the story he expected, I said: "I wouldn't buy a used car from this man."

 But I wasn’t in a position to get the evidence to write an investigative story. I would have needed access to HCA’s books. So I wound up writing a piece about competition between the for-profit hospital industry,and  non-profit hospitals that received tax breaks that they didn’t always deserve, creating unfair competition.  Scott aruged. This was about the only idea that Scott had.  (He  had gotten it from Richard Rainwater. In fact, Rainwater was correct: some non-profit didn’t (and still don’t) provide enough benefits to their communities to justify the tax break.)

The Back-Story: Two Men with A Vision

Fort Worth financier Richard Rainwater set Scott, a mergers and acquisitions lawyer from Dallas, on the path to corporate stardom in October 1987, when the two  created Columbia Health Care.  When Scott and Rainwater  teamed up, Scott’s medical experience was limited to helping health care companies buy and sell each other. He got his start in the M&A business,  orchestrating deals involving radio stations, fast-food businesses and oil and gas companies. He was, as Joe Flower observes, “the kind of lawyer that a buy-out artist would lovingly call a ‘mechanic.’”  

 Rainwater’s knowledge of running a hospital was equally limited. But they had a vision: “to do for hospitals . . . what McDonald’s had done  for the food business . . . what Wal-Mart had done in the retailing business.” Rainwater wanted to combine volume with low cost. (Since then, of course, U.S. hospitals have learned how to combine volume with high cost, but that is a story that HealthBeat readers already know.)

In Part 2 of this post, I will chronicle Scott’s rise and fall at Columbia/HCA, raise some questions about how much the Frist family knew about the Medicare fraud, why Scott was never questioned, and why the company settled with the government when it did. Finally, I’ll take at look at the chain of urgent care clinics that Scott has set up in Florida, the alleged charges against them, his campaign against health care reform, and the danger that he might be elected Florida’s governor.  In the meantime, let me recommend the post below, from “Still Liberal at 83,” an imaginary dialogue between Scott and Scott’s “inner voice.”

15 thoughts on “I Remember Rick Scott: A Great Makeover, but Still the Same Guy Part-1

  1. I look forward to part two, but hopefully you will have less emphasis on looks and demeanor. Let your argument stand for itself, we get that you don’t like the guy and hate everything he stands for. Does the over the top commenting about his appearance and demeanor let you rationalize your feelings or dehumanize him? It doesn’t matter if he’s a combo of Brad Pitt and George Clooney, let your argument and facts of the case speak for itself.

  2. That’s neo-criminal. It’s not about appearance, it’s about the manner he operated and raped the communities and Medicare in which the Columbia/HCA properties operated. I was at AMI when we got an offer from the then 2 El Paso hospital Columbia Group. AMI was the 3rd largest proprietary hospital operator at that time. This guy us driven by unbridled greed, with little to no ethics or sense of fair play. The stench of Columbia/HCA remains with us today. That he is even free (which Colunbia/HCA stuck holding the $1.7 Billion reord fine), let alone a candidate for Governor, is a testimony that we indeed do live in the ‘United States of Amnesia’.
    One more time that appendage down there does it again. They keep topping the national agenda with very bizarre ‘triumphs’.
    Solantic, just another story about which I won’t start here, now.
    Thanks, looking forward to part deux!

  3. Thanks, Maggie, for the continuity on this guy. I worked at an HCA facility from 89-96 and met Rick on a couple of occasions. For a while, he was a hero to us. As memory serves, however, your assessment/descriptors are/were right on target. I seem to recall reading of a meeting between Rick and Hillary during her Commission days – he offered to buy all the VA hospitals and she asked what he would do with them: “Close them.” She declined the offer. Can’t wait for Part Two.

  4. Jenga-
    Thanks for an astute comment.
    I did actually think twice about whether I wanted to mention Scott’s appearance and demeanor in this post–so I understand your critique.
    If you knew me, you would know that I don’t care about looks or appearance, certainly not in any conventional sense.
    But that’s not why Rick Scott made me uneasy. It was the fact that, when I looked directly in his eyes (which is how I usually made contact with people I interviewed) there was no one there.
    When I wrote this post, I did actually think twice about whether I wanted to emphssize Scott’s appearance and demeanor –so I understand your misgivings.
    I don’t take a person’s looks as the clue to who they are– I look into their eyes (as I described in the story.)
    But, unfortunately, at some point in the 1980s, looks and demeanor became key for anyone who hoped to be a CEO. (I interviewd a great many celeb CEOs in the 1980s and 1990s.)
    If they didn’t look the par-and couldn’t project the energy of a celeb– they didn’t get the job (or the cover stories.)
    The point is not that I didn’t find Scott attractive, but that he didn’t fit the stereotype that others found attractive.
    Why, then,I wondered, did he get the job?
    That’s the key to the story. Whistle-blowers report that Frist was already keeping two sets of books (one that thwy showed to Medicare) before Scott became head of Columbia/HCa. When Frist brought Scott in — I’m afraid he brought him in to do the dirty work.
    Finally, and sadly, a person’s character, childood and life history tend to show up on their face.
    As a writer I’ve always been aware of this. It’s not about whether a person is attractive in a convetional sense (long nose, short nose, etc.), but whether they have had a happy or unhappy life, a happy or unhappy childhood.

  5. There are a few more reasons why he got the job that you would have not been privy to. Maybe his metrics were off the charts for possibly improper reasons and the leadership was looking at the bottom line, maybe he was an absolute shark in the board room and negotiations. We probably will never know. I meet 100 new people a week in a private setting and I consider myself perceptive. I think you can percieve anxiety, indifference, confidence, shock, relief and anger, but I think it is a stretch to be able to glean one’s childhood by looking at their face. I certainly wouldn’t make judgements about their character. I know you will love this analogy, but it sounds like when Bush talked about seeing Putin’s soul in his eyes. I thought a silly statement then and now. I just see it as impossible to make such judgement by looking at people. I love seeing the merits or weak points of an argument without the over the top ideological sextant. Which is possible on this site otherwise I would never visit. We could discuss Peter Orzag and would it persuade anyone to my point of view, if I discussed his ridiculous toupee. Probably not. Would pointing out that Donald Berwick’s picture looks like the cross-eyed uncle you avoid at thanksgiving going to add to the discussion? Not likely.
    Anyway, thanks for your response I’m looking forward to part 2 particularly getting into the retail clinics.

  6. Brad, Gregg, Jenga
    Brad–Thanks– great story about Scott, Hillary and the VA.
    Only Rick Scott would think about closing down “The Best Care Anywhere”
    Gregg–I’m afraid you’re right that this is the United States of Amnesia. Particularly today, the media is teaching us to live in “Real Time” on Internet, on Cable, etc.
    Very few people read history (or major in history in college) anymore which only dooms us to repeat, faster and faster.
    I accept the fact that we are doomed to repeat our mistakes, but it would nice if 100 years passed before we made the same catstrophic mistake.
    As we got ready to go into Iraq I was amazed that so few people seemed to see that it would be Vietnam, all over again.
    On appearance– it’s not a matter of whether someonoe is good-looking or bad-looking. But a person’s appearance usually reflects his inner life. I think of Bill Clinton–and his crinkly eyes, or Dick Nixon glowering, or Jimmy Carter-kindness written across his face.
    Part of this is a lifetime of experience and emotions etching themselves on the face. And childhood experinece has the most powerful effect.
    Children who grow up in poverty, surrounded by anxiety and anger, die sooner–even if their life circumstances changes radically later on.
    When I met him, Rick Scott looked young–almost boyish–and worn, at the same time. You could see the boy who worked so hard, whether at boy scout camp or elsewhere, to accumulate those nickels and dimes.
    This why money was (probably still is) so very important to him.
    Novelists build a character through an accumulation of detail which includes physical detail. And of course actors build a charcter the same way. The very best actors look entirely different when playing different characters –I think of Philip Seymour Hoffma playing Truman Capote.
    Jenga– Eyes really are the windows to the soul. (Though GWB had no idea what the phrase meant when he used it.)
    The idea, and the phrase, go back to the bible.
    Emerson may have put it best, saying that the eyes reveal “the antiquity of the soul.”
    Some people possess “old souls”, as if they have lived many times, and you can see it in their eyes.

  7. I’m with Jenga on this — I’m fascinated to hear more about rick scott, but do not care about his appearance, and though yes you may have been much impressed by what you perceived and may even be right, this is not something that I could take on faith and that will tell me what I’d like to know about the man — but I’m definitely interested about his history.
    Appalling story about the VA!!!

  8. “a person’s appearance usually reflects his inner life”.
    And if that is the judgement, it is being distorted by one’s ideologic prism. To others Clinton’s crinkly eyes- could be explained by some as a coniving sexual predator.
    Nixon’s glower- resolve
    Jimmy Carter- weakness
    Now I don’t believe those, but that is what lies down that road. I suspect the discussion about demeanor and appearance in the post would be vastly different if Rick Scott ran a chain of indigent clinics or was in charge of say Kaiser. I don’t know it just seems that reading through those comments about his appearence and demeanor, that they are colored by your own ideologic prism. On a side note, I knew you couldn’t resist to dig on your favorite president. I blame President Bush for Rick’s hiring at HCA. That’s one hypothesis that you may not have thought of. LOL

  9. I don’t care if he was Mother Teresa’s silent partner. His pictures look creepy, but that doesn’t really bother me.
    A system where the only prerequisite for obtaining public office is to have many millions of dollars is what is bothering me.

  10. Margalit–
    Yes, what concerns me is that I think it is quite possible that he will be able to buy the election in Florida.
    Given past experience, I also would be concerned about the vote-count in Florida, though presumably everyone will be watching it quite carefully.

  11. Maggie, Thank you for your excellent piece on Scott, “Who Is Richard Scott— and Why Is He Saying These Things about Health Care Reform?” I wonder if you know how many hospitals he closed while building his McDonald’s of Health Care? It’s mind-boggling that an unrepentant crook is taken seriously in the looking-glass world that is modern America. I like how he stresses accountability but denies knowing what was going on at Columbia/HCA. Of course, the Frists were getting rich all the while. I asked Kurt Eichenwald about that very thing once and, if I remember correctly, he dismissed the Frists’ role. I can’t see how. They were there and on the board. I look forward to your reportage.

  12. Bud–
    Tnanks very much.
    Yes, it seesm that the Frist’s hospital compamy was using two sets of books before Rick Soctt became CEO.
    Both whistle-blowers and people on Wall Sreet suggest that HCA was already cheating Medicare –and that Tommy Frist Jr. must have known what was going on.
    I’ll write about this in my next post.

  13. Bud–
    Tnanks very much.
    Yes, it seesm that the Frist’s hospital compamy was using two sets of books before Rick Soctt became CEO.
    Both whistle-blowers and people on Wall Sreet suggest that HCA was already cheating Medicare –and that Tommy Frist Jr. must have known what was going on.
    I’ll write about this in my next post.

  14. In one of your Rick Scott articles it says the State of Fla pension fund sued him, but it was dismissed. Is there a citation to that case or info on what court it was in?