Inside Metro

An intimidating, multiagency federal investigation into possible Medicare fraud and overbilling hasn’t kept Columbia/HCA Healthcare Corp. officials from thinking about expansion and future office needs.

During the past several weeks, officials at the Nashville-based health care conglomerate have been negotiating with the Nashville International Airport to buy or lease up to 100 acres of airport-owned land where Columbia/HCA would either relocate or expand its headquarters.

Sources familiar with the negotiations say Columbia/HCA chairman and CEO Rick Scott, whose reputation has been wounded by the federal investigation and raids on several Columbia hospitals, wants to be able to walk “from his jet to his office.” Columbia/HCA owns more than 300 hospitals across the United States, and sources say Scott would prefer that the company’s top executives have closer and more convenient access to the airport and to all of Nashville’s interstates. The corporation’s current offices at One Park Plaza, behind Centennial Park, require a good 20-minute commute to the airport, and the drive can take even longer in rush-hour traffic.

Members of the Airport Authority, which governs the airport’s operations, say they’ve been instructed not to talk to the media about negotiations with Columbia. But several Authority members, requesting anonymity, confirmed that talks have been under way for at least the past three or four weeks.

Airport Authority minutes show that the Authority’s Planning and Asset Committee voted several weeks ago to continue negotiations with the company. At that time two members of the Authority—Pat Tatum, an airport-area neighborhood representative, and Joe Whitson, an engineer at Gresham Smith and Partners—voted in favor of pressing on with a possible deal. Beer distributor Fred Dettwiller abstained, and Nashville Gas Co. president Bill Denny voted against it.

Airport spokeswoman Carole Willis says discussions have focused on 80 to 100 acres of available land near the BNA Corporate Center, an office park. While Columbia officials were reportedly interested in buying the property, the Federal Aviation Administration is not likely to approve such a purchase, Willis says. Therefore, a long-term lease is a much more likely scenario.

Willis confirms that airport officials are “talking to [Columbia/HCA],” adding, “I think the ball’s in their court right now.”

For its part, Columbia isn’t saying much of anything about the airport discussions, except that any move would probably be an expansion rather than a wholesale relocation of operations.

“We’re looking for additional land to build for some additional needs that we have, but we’ve made no other public statement about what locations we may be looking at, and we’re not ready to do that at this point,” says Eve Hutcherson, director of corporate communications for Columbia.

Take a break

The possible relocation raises two very important questions: First, whether Columbia, which got substantial tax breaks upon relocating in early 1995 to Nashville from Louisville, Ky., intends to ask for further concessions from Metro. Second, if such a request is made, will a company under such intense investigation for criminal activity stand a chance of obtaining any favors from local officials or the Metro Council?

It’s unclear whether a deal at the airport would require approval of the 40-member Council. The nature of Council’s involvement will be determined by the exact nature of Columbia’s request. What if, for example, Columbia plans to vacate its current site altogether but wants to keep the $26 million in tax breaks Council gave the company two years ago? Metro has forgiven $2.6 million in local taxes every year for 10 years, but those tax breaks are specific to the Park Plaza site. Columbia would have to ask Council to make them transferable to the airport land.

The Airport Authority itself is tax-exempt. But corporate entities that have constructed buildings and leased land from the Authority are required to make payments to Metro government in lieu of property taxes. BNA Corporate Center, for example, is located on property near the spot Columbia is considering for its new offices. Last year, the BNA complex paid $209,725 in lieu of property taxes.

It is unclear whether, in a revised deal with Columbia, the company would ask to be exempted from making such payments to the city. If what Columbia says is true, the company would maintain its campus behind Centennial Park, and it is to that location that the corporation’s current tax breaks are tied.

“Anything that we lease or buy or build or whatever would be in addition to what we’ve got [at One Park Plaza],” Hutcherson says. “This is very early on in the discussions, and I just don’t think it would be appropriate to be discussing that at this point, especially because we plan to maintain this campus, which is the campus for which [the property tax breaks were] designed in the first place.”

According to Mayor Phil Bredesen’s office, Columbia hasn’t yet asked for any more favors. And it may be that Columbia can read the writing on the wall. Airport Authority members and others agree that, if company officials go to the city for more concessions, they may not like the reception they receive.

One source familiar with the negotiations even went a step further. “This is not a good time for Columbia to think about building a new headquarters,” the source said. “In my opinion, Columbia needs to wait until things quiet down and until we see how many people are going to jail.”

Several Metro Council members say they don’t think the widely publicized federal investigation into Columbia’s billing practices would necessarily play a role in the possible consideration of more concessions. Neither do they think the timing is good.

“What would probably have more bearing on the Council is a really tough budget and the tax increase we just went through,” says Council member-at-large Leo Waters, referring to last month’s 54-cent property tax increase.

Columbia officials would have to make a “strong case” in asking for further tax incentives, Waters says, and he adds, “I don’t know that, with all the factors involved, it would be real good timing.”

Council Budget and Finance Committee chairman Ronnie Steine says no one knows what, if anything, the federal investigation of Columbia/HCA will turn up. What’s more, the investigation may very well last several years.

“[Columbia] could put some deal on the table that I could say was horrendous,” Steine says. “But I don’t think the fact that Columbia is under investigation is an automatic ‘no’ that the city won’t continue to talk to them. It may be years before we know whether the investigation is finding anything.”

When big guys collide

A power-packed roster of local figures is already involved in the discussions of Columbia’s expansion at the airport. Former Columbia/HCA executive Clayton McWhorter is a member of the Airport Authority, and he is also a member of the Columbia/HCA board of directors. Further, McWhorter is a close associate of Columbia Vice Chairman Thomas Frist Jr., who reportedly has serious concerns about the investigation into Columbia’s billing practices.

Frist and his father, Dr. Thomas Frist Sr., were among the co-founders of Hospital Corporation of America, which merged with Columbia three years ago. The younger Frist has spent many years building a solid reputation in Nashville, and he is generally regarded as a gentlemen with well-honed diplomatic skills. He and Scott have vastly different styles—Frist is cordial and accommodating, Scott is more heavy-handed and detached.

Some insiders speculate that similar differences between McWhor-ter and Scott played a role in McWhorter’s departure from Columbia. And those stylistic differences may also have a bearing on what’s going on at the airport. Knowledgeable sources say Scott is more interested in a land purchase, even though the FAA is not likely to approve one. McWhorter, meanwhile, is said to be opposed to the sale of the land but in favor of a lease. While Frist has not publicly addressed the move, most observers seem to think he is falling into McWhorter’s camp, lending further fuel to talk of a rift between Scott and Frist. McWhorter did not return phone calls.

This is not the first time Columbia officials have thought about and looked into sites for expansion. Two years ago, company representatives entertained the idea of building or leasing a prospective high-rise office tower on the site of the former Cain-Sloan department store on Church Street. And Metro showed some interest.

Developers and city officials got as far as drawing up plans to present to Columbia. Those plans included 600,000 square feet of office space, with construction costs of about $94 million. Talks among Columbia, downtown developers, and Metro ultimately went sour, right around the time Houston Oilers owner Bud Adams contacted Bredesen about bringing pro football to Nashville.