Walter McNerney looks back on his career of more than 45 years in healthcare and credits much of his success to timing.
At age 24, he was an associate director of a major academic medical center.
At 32, he was a full professor in the process of founding a university's healthcare administration program.
And by 43, he was the top executive of the most widely known insurance association, covering one in two Americans.
"A lot of it was timing," McNerney said.
But McNerney's peers and colleagues of the past five decades, who describe the 70-year-old as a healthcare giant, say he accomplished more than simply being in the right place at the right time.
Rather, McNerney was in the right place ahead of time.
"Even though he was one of the youngest in his class, he was surely one of the brightest, if not the brightest," said Stanley Nelson, a classmate of McNerney's in the University of Minnesota graduate program in health administration.
McNerney was born June 8, 1925, in New Haven, Conn., where he spent his early years. His father, a clerk with the New York and New Haven Railroad, and his mother were of Irish descent. He attended Yale University and served in the U.S. Naval Reserve from 1943 to 1946, rising to the rank of lieutenant, junior grade. After graduating in 1947, McNerney continued his education at the University of Minnesota, earning a master's degree in health administration in 1950.
"I came from a strong second-generation (American) family and topped that off right out of college having ship-board responsibility in the Navy," McNerney said. "With that, you grow up quite quickly."
Educator and administrator. The traditional career path for graduates of health administration programs was to go to work at a community hospital. Jobs were plentiful because the Hill-Burton Act was hitting its stride, helping to finance hospital construction across the country.
"Walter chose academia, which was a very unusual direction at that time," said McNerney's classmate Nelson, former longtime chief executive officer at Henry Ford Health System in Detroit.
McNerney's first healthcare position was a dual role of sorts, serving both as educator and hospital administrator. He was hired in 1950 as assistant coordinator of hospitals and clinics at University of Pittsburgh Medical Center. He also served on the faculty of University of Pittsburgh's Graduate School of Public Health.
"It's not just doing the right thing, but having it come at the right time," McNerney said.
He remained at the University of Pittsburgh until 1955, then moved to the University of Michigan, where he founded the school's program in health administration. What started as just McNerney and a part-time secretary in 1955 has developed into a model program that was one of the first to combine education, research and community service into the healthcare administration program.
"He's almost a renaissance person in the healthcare field because he helped start graduate programs at Michigan and Pittsburgh," said Stephen Shortell, who has taught with McNerney for the past 14 years at Northwestern University's J.L. Kellogg Graduate School of Management in Evanston, Ill.
Educators like McNerney were known as "triple threats" because of their skills in teaching, managing and consulting.
"The program in health administration was in the school of public health but embraced the schools of management and medicine," McNerney said. "The deans of the schools of management, public health, medicine and the vice president of the university were set up as an advisory committee. That worked out really well."
Choosing the Blues. In 1961, McNerney surprised some by shifting gears to become president of the national Blue Cross Association, which included 65 Blue Cross plans.
"Most of my close (hospital) friends thought I had defected," McNerney said, "but there was more excitement and more fun in dealing with payment because you got to interface with more people."
Indeed he did. McNerney reveled in meeting major players in healthcare policy, from U.S. presidents including John F. Kennedy and Richard Nixon to labor leaders like Lane Kirkland.
"There's no question that Walter has a superior intellect, but his strongest qualities are his high energy and enthusiasm for the tasks he has," Nelson said.
McNerney became one of the nation's major healthcare power brokers, influencing the adoption and implementation of Medicare and Medicaid legislation in Lyndon Johnson's Great Society. He worked out front and behind the scenes with influential lawmakers such as Democratic Rep. Wilbur Mills of Arkansas, the powerful chairman of the House Ways and Means Committee.
"I was young enough not to know my limitations," McNerney said.
McNerney was at the Blue Cross helm when its health plans across the country became the fiscal intermediaries for Medicare. "We got over 90% of Medicare Part A and two-thirds of Part B," McNerney recalled.
He also was unafraid to take risks.
During his tenure from 1961 to 1978 as president of the Blue Cross Association, McNerney asked association members to allow HMOs to be a part of all the Blue Cross indemnity packages across the country.
In the 1970s, hospitals and physicians didn't like HMOs any more than they do today. Even insurers at that time had little taste for the HMO, then a new term used to describe prepaid large group physician practices.
"I knew HMOs weren't popular, but we started to recognize that managed care had a place at the table," McNerney said.
The measure to allow HMOs passed by six votes out of the 2,000 votes from the presidents of Blue Cross plans across the country. The votes were weighted according to the size of each Blues plan.
By 1978, the Blue Cross Association and the Blue Shield Association were concerned about a possible loss of market share. In response, they merged their organizations, which included 105 plans across the country.
McNerney was chosen as president of the Blue Cross and Blue Shield Association, an organization that covered more than 120 million people and distributed some $55 billion in benefits through private and public programs.
McNerney said he saved the Blues plans "hundreds of millions of dollars" by pushing the association to research the necessity of medical tests at hospitals. In 1979, McNerney recommended that Blues plans refuse to pay for routine admission tests for surgical patients at hospitals, saving their plans more than $200 million.
"The trick was to get the employers excited since they were the payers," McNerney said.
McNerney didn't worry about what a few dissenters said. He saw the buyer of healthcare becoming increasingly tough.
"The price of sticking your neck out for 20 or 30 years is that the people who are tenaciously in love with the status quo tended to hate you," McNerney said.
Despite what some perceived as his controversial proposals, McNerney was and remains among the most highly respected individuals in healthcare.
"Running the (Blues) association is like running the United Nations," Nelson said. "It's not led by a bunch of shy, retiring executives. There are a lot of egos. Walter had and has consummate skills of diplomacy, intellect and consensus building."
Moving to the boardroom. In 1982, McNerney stepped down from Blue Cross and Blue Shield after years of successes, but he continued to have one foot in education and another in the healthcare field through consulting and serving on many boards.
In his governance capacities, McNerney has represented both for-profit and not-for-profit organizations. His awards and honors are many. He was president of the National Health Council and chairman of the Secretary's Task Force on Medicaid and Related Programs for the U.S. Department of Health, Education and Welfare.
McNerney, who has remained active in healthcare as mentor, consultant and educator, is currently the Herman Smith Professor of Health Policy at the Kellogg Graduate School of Management at Northwestern. He also is chairman of McNerney Heintz, a Chicago-area healthcare consulting firm.
He and his wife, Shirley, have five children and 16 grandchildren.
"I always found him to be available and unhurried, despite an enormously busy schedule that had him on the road most of the time," said Bradford Gray, director at the Institution for Social and Policy Studies and professor of research in public health and sociology at Yale University.
Gray, who was a study director at the prestigious Institute of Medicine, served with McNerney as chair of the IOM's healthcare services division.
"He read and criticized drafts before they went to the committee," Gray said. "These critiques were an unusual combination of toughness and gentleness. He was always constructive and supportive, even when he sent me back to the drawing board with a section or chapter."