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April 19, 2020 09:25 PM

Former Treasury secretary, OMB official Paul O'Neill dies

Modern Healthcare
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    Paul O'Neill, a former Treasury secretary and healthcare quality advocate who often raised the ire of colleagues, died Saturday. He was 84.

    O'Neill's son, Paul O'Neill Jr., confirmed that his father died at his home in Pittsburgh after battling lung cancer for the last couple of years. After a few surgeries and chemotherapy, he decided against any further intervention four or five months ago, he said.

    "There was some family here and he died peacefully," the son said. "Based on his situation, it was a good exit."

    O'Neill served as Treasury secretary from 2001 to late 2002. He was forced to resign after he broke with President George W. Bush over tax policy and later produced a book critical of the administration.

    In healthcare, an industry that he fought vehemently to change, he famously resigned from the UPMC board in 2004, contending the system's leaders weren't doing their best to adhere to strict standards of quality set by a ground-breaking collaborative called the Pittsburgh Regional Healthcare Initiative.

    O'Neill helped launch the group in 1998 when he was chairman and CEO of aluminum maker Alcoa. The consortium of 42 hospitals, four insurers, dozens of healthcare purchasers, and corporate and civic leaders adopted some fairly lofty goals for regional healthcare, including the elimination of medical errors and hospital-acquired infections.

    In a 2005 profile in Modern Healthcare, O'Neill said he considered healthcare the most important domestic issue in the country at the time. In his calculation, if everyone in the industry just did what he or she already knew worked and did it well, it would reduce overall healthcare costs by 50%. He fought to lower nosocomial infections and sought to implement the Lean manufacturing philosophy to improve quality.

    O'Neill blamed hospital leadership in general. "In great organizations, you don't issue thunderbolts from the center," he said.

    In high-performing systems, leadership accepts responsibility for eliminating danger and waste and sits down and figures out a way to fix it, he said in the 2005 profile. At the time, O'Neill said there were only a few hospital administrators in the country who had "publicly declared that they are responsible for everything that goes on in their facility, including most importantly for everything gone wrong—that they are personally responsible."

    O'Neill's blunt speaking style more than once got him in trouble as Treasury secretary. He sent the dollar into a tailspin briefly in his early days at Treasury when his comments about foreign exchange rates surprised markets. In the spring of 2001, O'Neill jolted markets again when during Wall Street's worst week in 11 years, he blandly declared "markets go up and markets go down."

    He was more focused on the traditional Treasury secretary's job of instilling confidence during times of turbulence later that year when he helped get Wall Street re-opened after the Sept. 11 terror attacks. O'Neill was also instrumental following the attacks in beefing up the government's programs to disrupt financing to terrorist groups.

    Treasury Secretary Steven Mnuchin said Saturday on Twitter, "Saddened to hear of the passing of the former 72nd Treasury Secretary, Paul O'Neill. He served @USTreasury and America with distinction during challenging times. My condolences to his family."

    Tony Fratto, who served as O'Neill's Treasury spokesman, described O'Neill as a "working class guy" who "cared about how things impacted real people."

    Fratto, currently a partner with Hamilton Place Strategies in Washington, said that one of O'Neill's passions was workplace safety, and that he would tour the Treasury building looking for safety issues that needed to be fixed.

    After leaving the Bush administration, O'Neill returned to Pittsburgh, where he had headed Alcoa from 1987 to 1999. He resumed working with the Pittsburgh Regional Health Initiative, a consortium of hospitals, medical societies and businesses studying ways to improve healthcare delivery in Western Pennsylvania. The subject had interested him since his days as a budget analyst in Washington with the Office of Management and Budget during the Gerald Ford administration.

    He also devoted time in retirement to projects that would deliver clean drinking water to Africa. As Treasury secretary, O'Neill had focused attention on poverty and combating diseases such as AIDS in Africa, touring the continent with Irish rock star Bono.

    While at Alcoa, O'Neill lifted the company out of the doldrums during his 12-year stint as the Pittsburgh company's CEO. Shortly after he took the job in April 1987, he began emphasizing factory safety and employee dignity as a top priority.

    His ideas weren't initially well received by profit-driven investors, who cared more about Alcoa's financial performance. After hearing one of O'Neill's first presentations as Alcoa's CEO, one money manager decided the company had put a "crazy hippie in charge" and advised his 20 largest clients to sell its stock, according to the book "The Power of Habit" by Charles Duhigg.

    That investor later called it one of his worst decisions. By the time, O'Neill stepped down as CEO in 1999, Alcoa's accident rate had plunged and its stock had soared more than seven-fold at a time when it was part of the Dow Jones Industrial Average.

    Before taking the helm at Alcoa, O'Neill was president from 1985 to 1987 of International Paper Co., a firm he joined in 1977 after his stint at OMB.

    After graduating with an economics degree from California State University in Fresno in 1961, O'Neill joined the Veterans Administration in Washington, working as a computer systems analyst. He later moved to OMB and rose to become deputy director of the budget agency from 1974 to 1977.

    O'Neill is survived by his wife, four children, 12 grandchildren and 15 great grandchildren.

    The Associated Press contributed to this report.

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