By Dan Primack
March 10, 2011

Hospital chain HCA Holdings Inc. last night defied the odds by raising $3.79 billion in its initial public offering. And now it’s doing the same thing in its first day of trading.

HCA HCA has hovered between 2% and 4% above its $30 IPO price so far this morning, despite the broader market being down nearly 200 points. Not exactly a first-day “pop,” but more than holding its ground while those around it tumble.

How come? One explanation is that public investors have been clamoring for a large, successful hospital operator ever since HCA went private in 2006 for $33 billion.

“That deal sucked a lot of the equity out of the hospital sector,” explained one healthcare investment banker. “There are lots of smaller players, but I think people have been waiting for the big dog to return.”

HCA reports $24.46 billion in 2010 revenue, compared to less than $13 billion for Community Health Systems CYH or $9.2 billion for Tenet Healthcare Systems THC . On the other hand, HCA also has more than $28 billion in debt, compared to just $13.2 billion for CHS and Tenet combined (the merged number may ultimately matter, since CHS has been trying to buy Tenet for the past few months).

If HCA shares continue to rise during the upcoming weeks and months, expect other privately-held hospital chains to seriously consider IPO of their own. The Blackstone Group BX , for example, bought Vanguard Health Systems in 2004 for $1.75 billion. TPG Capital bought IASIS Healthcare that same year for $1.4 billion. And Chicago-based GTCR has been building its Capella platform since 2005, when it acquired a quartet of HCA hospitals.

Not its first IPO rodeo

Today actually represents the third time that HCA has gone public. Its first IPO came in 1969, just one year after being founded by Dr.  Thomas Frist Sr., his physician son Tom and Jack Massey. Another Frist son, Bill, also went into medicine, but is better known for later becoming Senate majority leader (he currently is a partner at healthcare-focused private equity firm Cressey & Co.).

The company would decide in 1988 that its stock was undervalued, and was taken private in a $5.1 billion leveraged buyout. It returned to the public markets four years later, soon after which it merged with Columbia Healthcare — the company founded by current Florida Gov. Rick Scott.

Scott left in 1997, as federal authorities probed allegations that HCA had over-billed Medicare for certain services. Thomas Frist Jr. took over, and in 2000 HCA agreed to pay $840 million in criminal and civil penalties. At the time, it was the largest government fraud settlement in U.S. history — and also became an issue in Scott’s gubernatorial run last year.

HCA again returned to the private markets in 2006, when it was acquired for $33 billion by Frist Jr., Kohlberg Kravis Roberts & Co. BX , Bain Capital and Merrill Lynch Private Equity. The group already had recouped most of its initial equity investment via three dividend recaps last year, and is easily in the black following last night’s IPO. It also retains nearly a 70% equity stake, post-IPO.

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