Unfinished business: McFaul returns to consulting with a little twist

Healthcare Purchasing News, May, 2004 by Rick Dana Barlow

After six long years of sitting in the bleachers, healthcare expense management consultant William McFaul has decided to suit up again and head back into the field.

When McFaul retired in May 1998 at age 53, he did it with aplomb and a sense of relief. Although he racked up three decades of service in healthcare, he certainly wasn't going to miss the grueling travel schedule that dominated much of his later career, living out of a suitcase for days at a time, conducting site visits and educational seminars on expense control while his health took a beating near the end. Now he would have more time at home to spend with his family, his wine collection and just about anything else he ever wanted to do.

Back in September 1997, he sold McFaul & Lyons Inc. (MLI), the company he co-founded in 1980, to Johnson & Johnson for an undisclosed sum. The supplier made the acquisition one of the cornerstones of its Johnson & Johnson Health Care Systems unit but spun off the company in 2002 to MLI employees who re-christened the newly independent firm The McFaul & Lyons Group.

While McFaul actively kept an eye on all that was happening in the industry he had left behind [such as the scuttled Efficient Healthcare Consumer Response initiative and the dot-corn boom and bust), he saw no compelling reason to throw his hat back into the ring.

Then in March 2003 two colleagues lit McFaul's intellectual fuse, challenging him to develop some ways to revamp the healthcare supply chain. His passion got the better of him and he launched into an exhaustive and painstakingly derailed research project into what could be done. What he learned had frustrated him because he found that little truly had changed since he left the industry.

"You spend 30 plus years at something and all I was focused on was elevating the [materials management] profession to what it could and should have done all along," McFaul told Healthcare Purchasing News in an exclusive interview. "The 'resource manager' model I had originally envisioned was not just a mere name change. We tried to get people to recognize the value of the position. Unfortunately, I only pitched it to materials managers. That's what's different this time around. The change has got to happen from above [in the 'C-suite'].

McFaul contended that the entire C-suite doesn't yet see the need to reduce and control expenses as a strategic imperative. Expense management needs to be more of a larger, hospital-wide process, instead of fragmented departmental budgeting initiatives considered to be individual licenses to spend, he noted.

"We're going to provide some executive-level management staff to serve as the facilitators between executive level management as well as be mentors to materials managers," he said. "They will have clearly defined duties to enable materials managers to focus on their core competencies. These days materials managers have been pulled in too many directions to be effective. Everyone at the executive level expects them to be and do something but the department heads are fighting them along the way. We need to find a way to intertwine the objectives of the executives in the C-suite with the materials managers and the department heads."

McFaul launched The Center for Modeling Optimal Outcomes LLC as an umbrella organization for concept and idea generation, and recruited Paul Ramey, a former hospital administrator and a seasoned veteran in group purchasing and shared services, as his partner. Ramey is founder and president of Seattle based Institutional Purchasing Service (IPS). From The Center spawned Strategic Initiatives in Healthcare LLC as the new consulting firm to implement the concepts. McFaul tapped Joe Colonna as SIH's president and CEO. Colonna previously served as senior vice president of consulting firm NCI (Palm Harbor, FL), and prior to that he was vice president of Shared Services Healthcare Inc. (Atlanta).

"What [materials managers] need is communication skills," McFaul said. "In working with doctors, materials managers have to use sales techniques to convince the doctors to work with them. We have to redefine healthcare materials management and get the CEO to recognize that it's not what it was supposed to be and it should not be what it has become."

Much of the SIH's efforts will revolve around professional mentoring rather than the formulaic, template driven slash-and-burn and outsource-driven techniques commonly practiced by many firms. In fact, McFaul eschews the packaged program mentality altogether.

"If you want a program then don't hire us," he said. "If you want a long-term ongoing process, then hire us. You can't have any canned approaches to this. You have to be prepared to take modeling concepts that fit the need for expense management. Benchmarking data is almost meaningless based on the variety of what people do. The template mentality is dead wrong. We need to focus on the duties and functions everyone has at each individual facility.

"We have to eliminate the checklists that must be completed in order to achieve selected outcomes because there are too many variables to consider," he continued. "Our focus is on the outcome of the customer, which involves a process that has to be replicable but more flexible than the template mentality. It's what works for the client."