Chairman, chief executive officer, and president, Caremark
Education: Auburn University, BS, 1971.
Family: Married Linda (maiden name unknown); children: two.
Career: Arthur Young & Company, 1971–1981; GTI, 1981–1985, CFO; Oxylance Corporation, 1985–1986, CFO; Mulberry Street Investment Company, 1986–1990, president; Charter Medical Corporation, 1990–1992, executive vice president of hospital operations; 1992–1993, president and COO; 1993–1995, chairman, CEO, and president; Magellan Health Services, 1995–1997, chairman, CEO, and president; MedPartners, 1997–1998, president and CEO; Caremark, 1998–, chairman, CEO, and president.
Address: Caremark, 211 Commerce Street, Nashville, Tennessee 37201; http://www.caremark.com.
■ Mac Crawford has been praised as one of the most successful turnaround CEOs in the health-care industry. His earning of a reputation as an expert in saving floundering companies began in 1993 when he was appointed chairman and CEO of Charter Medical Corporation; a year later Charter emerged from Chapter 11 bankruptcy and was struggling to return to profitability. At the time, Charter owned and operated nearly one hundred psychiatric and acute-care hospitals across the United States. Under Crawford's leadership, Charter (which later changed its name to Magellan Health Services when it acquired that company in 1995) sold off its psychiatric and acute-care hospitals to focus on its managed-care business. The move paid off, and Magellan returned to profitability in the late 1990s, eventually becoming the nation's largest managed behavioral health-care firm.
Because of his success with Magellan, Crawford was picked to be chairman and CEO of MedPartners in 1998. MedPartners was also struggling with the massive changes in the healthcare industry in the 1990s. Once the leader in the physician practice management business—with more than 11,000 affiliated physicians and $3 billion in net revenues—the company imploded in early 1998, when it began reporting losses from its Western U.S. operations and was struggling with debt obligations in excess of $1.8 billion.
Crawford took over the helm at MedPartners in March 1998. Once in charge he began selling off the company's physician practices and shifted its focus to its small but growing pharmacy-benefits management business. At this time Med-Partners changed its name to Caremark. During the next six years, Crawford transformed the company into the largest mail-order pharmaceutical business and the fourth-largest pharmacy-benefits management company in the United States. In an interview in the Tennessean , Crawford described his experience at Caremark as "one of those stories where when you start out you don't have a clue what it will look like. But today, it's been a real success" (February 22, 2004).
After graduating from Auburn University in 1971, Crawford received a license as a certified public accountant and worked for Arthur Young & Company for 10 years. During this early period of his career he developed his strong financial management skills and general knowledge of business. After his years at Arthur Young, Crawford served as chief financial officer for a number of companies and in 1986 became president of Mulberry Street Investment Company, where he managed real-estate, venture-capital, oil- and gas-tax, and shelter investments.
In 1990 Crawford joined Charter Medical as executive vice president of hospital operations—his first experience with the health-care industry. By 1990 Charter was already experiencing serious legal and financial problems. In 1989 it had come under investigation for allegations of Medicare and Medicaid fraud and was involved in a lawsuit between Charter's then CEO and the company's employee stock ownership plan. Charter's psychiatric and acute-care hospital businesses were also in trouble, as cost controls in the health-care industry—driven by the growth of managed care—pushed psychiatric and chronically ill patients into less expensive treatments, such as outpatient and home-care programs. Despite these trends Charter continued to build or acquire inpatient facilities, accruing deeper loses.
In a 1995 article in Hospitals & Health Networks , Crawford recalled his early experience at Charter: "I didn't have a healthcare background. I came to Charter to financially restructure the company"; after a short time there, he realized that the company could no longer "continue to deliver behavioral health care in the same way. We needed a new model to continue to provide good-quality care on a more cost-effective basis" (February 5, 1995). Crawford won praise from analysts and industry insiders for reining in Charter's operational costs and improving relations with insurers and payers. He led Charter through a major financial restructuring and a Chapter 11 bankruptcy, from which the company emerged in 1992.
Crawford's success and leadership during this difficult period in Charter's history led to his appointment as president and COO in 1992, then as chairman and CEO in March 1993, replacing Fickling. Crawford quickly refocused Charter on its core business of managed behavioral health-care operations, selling off its general hospitals and many of its psychiatric facilities. The company also began offering outpatient and homecare services, and it aggressively sought out partnerships with large health-care systems to either provide or manage their behavioral-health services. In 1995 Charter purchased Magellan Health Services and took on that name. Magellan, too, owned and operated a number of psychiatric hospitals before it was acquired by Charter; in 1997 these facilities were sold to Crescent Operating, the money being used to purchase two more behavioral-health companies. By the late 1990s Crawford had succeeded in transforming Charter into the country's largest managed behavioral health-care company.
In 1995 Crawford discussed the management and leadership issues he confronted during his years at Charter. Speaking of the transformation of Charter from an owner and operator of psychiatric hospitals to a managed-care company, he said: "Internally, it's been very difficult. Many of our people are traditional hospital people, and convincing them that we are not a hospital company anymore isn't easy. Cultural issues were the most difficult part of the transaction" (February 5, 1995).
Crawford further emphasized the importance of instilling a value system in an organization, especially during times of change, and in making those values very clear. "If the value system is in place, it's fine to have cultural differences on how certain facilities will be run." He also stressed the importance of empowering employees to take risks: "I've got 104 CEOs throughout my facilities. We've told them that we are going to take chances while we build linkages. They have my assurance that I won't fire them for making a mistake" (February 5, 1995).
In March 1998 Crawford left Magellan to become president and CEO of MedPartners. MedPartners was the country's largest physician-practice management company and was in turmoil following a failed takeover by smaller rival PhyCor and larger-than-expected losses of nearly $841 million in the fourth quarter of 1997. The company also faced debt obligations totaling $1.8 billion.
A few months after joining MedPartners, Crawford went to the company's board of directors with a solution: sell off most of the company's 240 physician practices and concentrate instead on Caremark, its pharmacy-benefits management division. Pharmacy-benefits management firms, or PBMs, are essentially intermediaries that negotiate discounts with pharmaceutical companies for large employers and managed-care insurers or health plans. Because of the growing pressure on employers to hold down increases in health-care costs, Crawford saw promise in the growing role PBMs could play in providing a solution. By the following year MedPartners had sold off all but 12 of its physician practices across the United States and had laid off several thousand workers in order to focus exclusively on its PBM business. It also changed its name to Caremark in order to reflect this change.
Crawford recounted this turbulent time at Caremark in a February 2004 article in the Tennessean : "You can't be successful doing turnarounds if you don't walk in from day one and believe you're going to fix it. But we didn't exactly know what we were going to do" (February 22, 2004). Crawford was drawn to Caremark's PBM business for more than its growth potential: the division had revenues of $2.4 billion and generated large amounts of cash. According to Crawford, such cash flows are the key to turning around any struggling business. "Any time you're doing a restructuring, you need cash flow. Cash is a valuable commodity" (February 22, 2004).
Under Crawford's leadership Caremark thrived. In 1998 its revenues were $2.4 billion; by 2003 they had grown to nearly $9 billion. In spite of the difficult decisions he was forced to make—especially the layoffs of thousands of workers—Crawford won the respect of employees, analysts, investors, and creditors for saving MedPartners and transforming it into one of the country's most successful businesses. In 2004 the company had nearly paid off its debt and had acquired the nation's second-largest PBM firm, AdvancePCS. The merger made Caremark the second-largest pharmacy-benefits management company, with annual revenues of more than $23 billion and 600 million prescriptions filled per year.
See also entry on Caremark International Inc. in International Directory of Company Histories .
Cerne, Frank, "Capital Decisions," Hospitals & Health Networks , June 5, 1995, p. 33.
Cooper, Helene, and Glenn Ruffenach, "Charter Medical's Board Ousts Fickling, Firm's Founder, Chairman, Top Officer," Wall Street Journal , March 5, 1993.
Crawford, Edwin, "Finding the Right Niche," Hospitals & Health Networks , June 5, 1995, p. 38.
——, "The Wake-Up Call," Hospitals & Health Networks , February 5, 1995, p. 48.
Evans, Carol Muse, "Caremark Has Forged a Drastic Turnaround," Birmingham Business Journal , June 9, 2000, p. 11.
Freudenheim, Milt, "Merger of Drug-Buying Companies Has Some Doubting Purchase Price," New York Times , September 4, 2003.
"The Leadership," Hospitals & Health Networks , February 20, 1995, pp. 30–33.
"Mac Crawford: Changes Have Only Begun at Charter," Alcoholism & Drug Abuse Week , August 15, 1994, p. 3.
Ruffenach, Glenn, "Charter Medical Taps New Manager to Run Hospitals," Wall Street Journal , October 24, 1990.
Russell, Keith, "Caremark Triumphs in Fight for Profitability," Tennessean , February 22, 2004.
Seligman, Phill, "Good Medicine at Caremark," BusinessWeek Online , January 13, 2004.
Sharpe, Anita, "MedPartners Loss Exceeds Its Forecast," Wall Street Journal , March 19, 1998.
Yu, Roger, "Antitrust Issues Surround Merger of Pharmacy-Benefit Managers," Dallas Morning News , September 3, 2003.