John Alexander McMahon has always kept his cool.
On a hot August day in 1972, McMahon was calm and assertive as he met an aggressive press corps that wanted to know all about a man who suddenly emerged from healthcare's shadows to become president of the American Hospital Association.
"Where did they get him from, central casting?" one reporter asked, according to an account in the September 1972 issue of Modern Hospital, the forerunner of MODERN HEALTHCARE.
From that moment until his retirement in 1986 to a professorship at his beloved alma mater of Duke University, Alex McMahon was a voice of reason in the increasingly tempestuous world of healthcare.
Silver-haired, blue-eyed McMahon, a tall, lean man who usually dressed in crisp, dark suits, certainly was well-cast for the part, said David Drake, a longtime AHA associate who was the association's secretary-treasurer from 1982 to 1992. "He looked presidential."
As a candidate for the AHA's top post, McMahon had been a dark horse, partly because he had been involved in healthcare for fewer than a dozen years, Drake said.
But McMahon's charm, his people skills and his diverse background won over the AHA board.
Candor could also have been added to McMahon's list of characteristics. McMahon said he hadn't thought about leading the AHA.
"They called me and asked me if I was interested," McMahon, now 73, said from his office at Duke in Durham, N.C. "I asked, `Why me?' I didn't know much about this business."
But it was his exemplary style that won him the job during a hot situation within the ranks of the AHA.
One of the most difficult and political searches began shortly after longtime AHA Chief Executive Officer (the title was soon changed) Edwin Crosby died unexpectedly in February 1972 at age 64. After 18 years in the AHA's top post, Crosby was planning to retire and had already picked a search team to find his successor.
But the AHA board rejected the committee's recommendation of Walter McNerney, then national president of the Blue Cross and Blue Shield Association. So it was left up to the AHA membership to select Crosby's successor.
"They were casting around for names. Some the board liked, and some they didn't," said Jack Owen, president of the New Jersey Hospital Association from 1963 to 1982. "Alex's name kept coming up as being fresh and from the outside."
The right stuff.
Even though McMahon came to the AHA after four years as president of Blue Cross and Blue Shield of North Carolina, he lacked an extensive background in healthcare.
"He had only been in the healthcare field for a few years, but he had the right characteristics and he proved that to the membership," said Drake, who spent 25 years at the AHA before retiring in 1992.
McMahon guided the North Carolina Blues to a position of strength in the South. The insurer was created through the merger of the Hospital Saving Association of North Carolina and the Hospital Care Association. McMahon joined the Hospital Saving Association in 1965 as vice president for special development. He became president of the North Carolina Blues in 1968.
"Alex did everything with great finesse," Owen said.
Through his Blues role, he became active in the AHA. He had been involved with an AHA finance committee, and people knew of his convincing oratorical skills during his time as a member of the AHA's House of Delegates from 1971 to 1986.
McMahon was born July 31, 1921, in Monongahela, Pa., and grew up in St. Petersburg, Fla. His family includes wife Anne, a son, three daughters and three step-daughters.
With a law degree from Harvard University (1948) and a bachelor's in pre-law from Duke (1942), McMahon spent 10 years as a professor of public law and government at the University of North Carolina at Chapel Hill. In 1959, he left to become general counsel and secretary-treasurer of the North Carolina Association of County Commissioners.
At the AHA, McMahon became the trade group's first full-time president. Previously, Crosby and predecessors were "executive vice presidents," and the president was an elected hospital executive from AHA membership.
The first seven years of McMahon's presidency were spent battling cost-control policies emanating from Capitol Hill and the White House.
Wrestling with double-digit inflation, an Economic Stabilization Program of strict price controls began in August 1971 under President Richard M. Nixon's administration. The Democratic Congress, intending to humiliate Nixon in the 1972 elections, gave the Republican president authority to impose a wage-price freeze on the economy.
But those policies expired, and Congress didn't extend their authority beyond April 30, 1974. Although other industries such as petroleum had been part of the freeze, healthcare was the only industry whose prices were controlled for the full 990 days of the federal program.
During that period, hospitals had to compete for employees, equipment and supplies against other industries that weren't controlled, McMahon recalled.
Just a few years later, President Jimmy Carter introduced another price-control effort in 1977. Carter had made controlling costs a top domestic priority of his administration, and he saw hospitals as a prime target because hospital prices had been rising so quickly.
Unlike Nixon's, these hospital price controls almost were made permanent by Congress.
Undaunted, McMahon launched an ambitious end-run on the Carter administration.
While many may equate the initials V and E with World War II's "Victory in Europe" day, McMahon, a U.S. Army veteran who served in the South Pacific during the war, used the symbols for the "Voluntary Effort" of hospitals to control their spending. Hospital spending had grown 13.1% in 1979. The V-E's 1980 goal was an 11.8% increase. Hospitals didn't meet the goal, but the effort was credited with holding down what might have been a larger increase.
"He was always under control and always trying to wrestle with the problems faced by the AHA," Owen said.
McMahon also was a winner when the House of Representatives voted down Carter's proposals to enact mandatory controls regulating hospitals on Nov. 15, 1979. "It was an important day and one we would never forget," Drake said.
Expanded Washington presence.
The lessons of the 1970s-which saw attacks on hospitals from Congress and the White House-led to McMahon giving the AHA's Washington office the firepower it needed for future battles. "We needed a number of people who could tell the story and sing the song," McMahon said.
Under McMahon's leadership, the Washington staff doubled to about 50.
McMahon also appointed Owen as a vice president to lead the Washington office in 1982 while McMahon traveled the nation and worked from the Chicago headquarters.
The AHA hired its first general legal counsel in Chicago when Richard Epstein was named senior vice president for legal affairs in 1976, but it had emphasized litigation even before that.
Proving its legal presence wasn't just window-dressing, the AHA filed its first lawsuit against the federal government in 1974 when it challenged the Nixon administration's economic stabilization program.
"We could've headed off some of those early battles in the 1970s," McMahon said.
The seeds were planted for the AHA to mobilize its forces and better educate state associations. Formed under his watch were the state issues forum and the American Hospital Association Political Action Committee.
"He put in place the process to build a grass-roots organization," Drake said.
The second half of McMahon's tenure was a bit more pleasant for hospitals. Despite controversies when the Reagan administration introduced prospective pricing for Medicare patients, hospitals enjoyed some of their best years.
But McMahon wasn't always so amenable to adopting all the ideas of AHA members and the organization's staff.
When it was time for McMahon to justify his or the AHA's position on something, his Southern drawl became noticeable. He'd say: "Let me 'splain something to you."
"Alex could say `no' better than any person I ever met," Drake said. "He has tremendous charm."
Mending fences was another McMahon strength.
While many hospital executives were not willing to admit the physician's importance to the healthcare system, McMahon put doctors first.
"Nothing happens in a hospital without a doctor ordering it," McMahon said.
McMahon was a peace envoy between the AHA and the American Medical Association for his entire tenure at the AHA. It was a storied battle between physicians and hospitals that still simmers today, although relations between the two associations improved over time because of McMahon's diplomacy.
Unity among hospitals was another strategy that McMahon pursued. "We were mostly the American not-for-profit hospital association," McMahon said, referring to his desire to rally investor-owned hospitals behind the AHA banner.
"We were going after some of the lost sheep," McMahon said. "You may not think (for-profits and not-for-profits) have a lot in common, but they do."
McMahon says the fears of today's not-for-profit hospitals are mostly unfounded.
"I never though there was much difference" between investor-owned hospitals and not-for-profits, he said.
McMahon continued offering his thoughts on healthcare when he left the AHA in 1986 at age 65 to become an endowed professor and chairman of Duke University's department of health administration. He also leads the Duke Forum, a lively annual education conference for healthcare executives.