Charles Housley: Purchasing Pioneer

Editor's Note: This profile was reposted with permission from the long-defunct First Moves Magazine, January/February 2003, by its original publisher Medical Distribution Solutions Inc., now known as Share Moving Media Inc.

By Rick Dana Barlow

During the Silver Age of materials management, Charles Housley may have been an abrasive, outspoken character and a radical thinker who evoked controversy, but he was a hospital executive who harbored the utmost respect for the profession and who's impact from his teachings, his books and his example, was profound.

Mark Thill, editor-in-chief of First Moves who has spent nearly 20 years covering healthcare supply chain management issues for a variety of trade publications, remembered Housley's steadfast dedication to materials management. "He was one of the first guys to recognize the essential role of materials managers in hospitals and one of the earliest proponents of elevating the position to an executive level," Thill said. "He was the bridge to the executive suite, the voice in the wilderness."

Bob Yokl Sr., value management strategist, The HCP Group Ltd. (Skippack, PA), read Housley's books, followed his principles and hired him to teach a class for materials managers when he was a corporate materials manager at a large healthcare system in the 1980s. "I had the pleasure of spending 24 hours with him to pick his brain when he trained my materials managers," Yokl said. "He was a real visionary and a trail blazer in the development of the concept of healthcare materials management in the 1980s."

Housley was well-known and revered for running a tight ship at the hospital where he spent more than 20 years of his career starting in the late 1960s through the 1980s — Saint Anthony Medical Center (Columbus, OH). He joined Saint Anthony in 1966 as administrative resident after leaving a year-long post as assistant administrator of East Tennessee Children's Hospital (Knoxville, TN). By 1984 he had worked his way up to president of Saint Anthony.

In the 1990s, he served as president and CEO of the multi-hospital system Michigan Health Care Corp. (Detroit) before moving on to Appalachian Regional Healthcare, a system of more than 20 hospitals, clinics, skilled nursing, rehabilitation services, home health agencies and homecare stores in Eastern Kentucky and Southern West Virginia, as community CEO of the system's Hazard/Perry County division. In August 2001, Housley was promoted to executive director of business and fund development for the entire system. Neither Housley nor any Appalachian Regional Healthcare representatives returned First Moves Magazine's requests for an interview.

Spell Check

Arguably, Housley pioneered the concept of just-in-time and stockless distribution agreements, working with American Hospital Supply Co. in the 1980s before the company ever packaged them under the ValueLink banner. Certainly, Housley advocated the benefits of the first JIT arrangements during many of the educational conferences and seminars he hosted. But for some reason he didn't emphasize the proximity of American Hospital Supply's distribution center to his hospital. It was right across the street. "This caused a lot of materials managers from rural areas to go home and try it with disastrous results," recalled Lee Boergadine, senior consultant at Cardinal Health Inc.'s Pyxis Corp., and a former hospital materials manager.

"He really put materials management on the map," Boergadine said. "He was a prolific writer of books on the subject, possessed a great ego and was somewhat lacking with full disclosure, but there is no doubt that materials management would not be where it is today without him."

David Kaczmarek, vice president, The McFaul & Lyons Group LLC (Horsham, PA), remembered the widely respected Housley's push for exchange carts and getting central services out of the distribution business. "Housley felt strongly that materials management needed to be a strong force in an institution and that the materials manager should be an executive," he said. "Although this position did temper somewhat after he became an administrator himself.

"One interesting feature of Housley's presentation was his insistence that he had the right answer and the only right answer to healthcare materials management," Kaczmarek said. "He could really get an audience going. There was always at least one very conservative manager — usually a purchasing manager who had taken the materials management title — who would start to debate the more advanced concepts. It was a losing battle. Personally, I think Housley did this on purpose to force the audience to think about what was being presented."

One of Housley's pet peeves was the precise spelling of the title. He was a staunch supporter of the more military-oriented materiel management and not materials management — a debate that continues to this day. Housley preferred the former spelling because it signified the "apparatus, equipment and supplies" of an organization while the latter referred only to components of a product or the individual products themselves. He saw materiel management as more than just moving products.

Two of the people who perhaps knew Housley the best were protégés George Hersch and John Siedlinski.

Hersch, vice president of materials management at Norton Healthcare (Louisville, KY) had a journalism and public relations background when Housley hired him in 1977 to be assistant director of materiel management at Saint Anthony, a position he retained until 1982. "Back then we were operating in a cost-based reimbursement system," Hersch said. "But he forced us to look at hospitals as a business at a time when cost-based reimbursement dictated that the more you paid for an item the more you would get back. He was really a man ahead of his time."

Among Housley's innovations, was his exchange cart model that enabled the forecasting of supply needs at a time when information technology wasn't available, according to Hersch. "He believed in getting all disciplines in the hospital to look at supply chain management and cost-savings opportunities through his evaluation and standardization of products (ESP) committees," he recalled.

But Hersch and Housley didn't really see eye-to-eye in one particular area. Housley felt that the director of pharmacy could handle materiel management in a dual role — that pharmacy and materials management could be overseen by one director. Consequently, Hersch reported to the director of pharmacy. "As materiel management grew into a real profession, it really required one director's full attention. Pharmacy, too," he said.

Inside Housley

John Siedlinski, president of Materials Management Consultants Inc. (Naperville, IL), was introduced to Housley right out of graduate school in July 1985. During Siedlinski's interview for his first hospital materials management job, executives at Rush-Copley Hospital (Aurora, IL) handed him their expectations and qualifications for the hospital's first director of materiel management position and asked him if he could implement the whole thing. It was a 319-page "Materiel Masterplan" created by Housley for the facility. The first 120 pages contained specific findings and recommendations for Rush-Copley, Siedlinski remembered. The remaining pages contained articles written by Housley, as well as his résumé and boilerplate forms, policies, procedures and job descriptions from Housley's hospital, Saint Anthony Medical Center.

Part of the Rush-Copley interview included a trip to Saint Anthony for a grand tour of Housley's operation, along with a two-hour interview by Housley himself. Demonstrating enthusiasm for Housley's plan and a willingness to implement it, Siedlinski was hired.

During his first month on the job Rush-Copley sent him back for a week to Saint Anthony to work side-by-side with Housley's materiel management staff to learn their processes firsthand. Siedlinski spent two days in purchasing and contracting, and one day each in the storeroom, receiving and distribution.

Siedlinski's exposure to Housley elicited a number of observations about his philosophy that provided a unique perspective into the mind of such an influential figure. "Charles was not a big fan of automation at that time (garbage in = garbage out) so a lot of his processes in purchasing, receiving, distribution and the storeroom were manual and form-driven," Siedlinski said. "In fact, I think there was a form for just about everything — including a request to have a new form printed." Of course, the print shop also reported to materiel management.

Because Housley saw the receiving dock as the gateway to the hospital, he told Siedlinski he only hired MBAs to work there and paid them more than what he paid his nurses, Siedlinski said. "He preferred to have high-priced staff work in receiving because he felt that this was the entry point into and out of the medical center and a lesser-skilled staff member may potentially make a costly mistake," he said. In fact, "receiving staff made common carriers wait until all items were accounted for and received before letting them go," he added, "and any boxes without a Saint Anthony P.O. number readily visible or that were damaged or from another hospital were promptly sent back on the truck that shipped them."

Saint Anthony was one of the first hospitals in the nation to implement exchange carts as a means to controlling PAR levels and identifying what was used on patient floors, according to Siedlinski. Housley maintained a simple way to know which cart was "up" vs. which had to be exchanged: Carts in place on Mondays, Wednesdays and Fridays sported a red cover and those on the other days had a blue cover.

"Charles and his director of materiel management made daily rounds to all nursing units using his cart exchange program," Siedlinski said. "If he saw a blue cart cover on a red cart cover day, he had a fit because he knew distribution did not do their job that day."

Housley's cart exchange program enabled the hospital to control patient charges because he could reconcile those charges within 12 hours and follow up on lost charges while they were still fresh on the nursing staff's minds, Siedlinski noted. Those patient charges that could not be reconciled to a patient were simply charged to the offending nursing cost center.

Whether it was genuine concern for efficiency or just a demonstration of management control, during Siedlinski's tour of Saint Anthony with Housley he recalled passing the director of pharmacy in the hallway. "Charles asked him what his inventory turns were for that week," he said. "The pharmacy director answered something like 14.2. Charles told him to get his turns up to 16.8 without incurring any overtime for his staff by the following week."

Saint Anthony's purchasing staff adhered strictly to an Approved Products List (APL) for every requisitioning department in the hospital, he remembered. "If buyers received a purchasing request for an item not appearing on that department's APL, the order was rejected and sent back to the requisitioner," he said. "All additions to the APL had to be presented to and approved by the Product Standardization Review Committee. They also had to approve all deletions to an APL. You could not add items to your APL until you deleted an equal number of items."

Even the Product Standardization Review Committee, chaired by the director of materiel management who was an ex-Army officer with two Master's degrees, followed procedures to the letter. There was a timed agenda and strict adherence to Robert's Rules of Order. "All justifications had to be filled in on the correct form and distributed to all committee members in advance of the meeting," Siedlinski said. "One agenda item was dropped from being considered because the paperwork was not completed correctly."

Blank Book

Although Housley wrote several books and hundreds of articles in scores of magazines, his most famous — or infamous, depending on your point of view — book was a little bound book he would distribute to attendees of his conferences. The title, "New Concepts in Materials Management Over the Past 20 Years," immediately piqued everyone's interest who saw it for the first time.

But the pages were blank. Some thought it was hilarious; others who took it seriously were gravely insulted.

George Hersch chuckled at the mention of the empty book, contending Housley did it for shock value and to make a tongue-in-cheek statement more than anything else. "He had the philosophy that there wasn't a lot of creativity in the field," Hersch said. "He thought that the position needed someone who was educated, trained and credentialed with critical thinking skills and strategic approaches to management issues and not somebody who just pushed boxes around for 20 years.

"His interest was in developing materiel management as a profession and wanted people to see it that way," he continued. "He pushed education and felt so strongly about it that he funded it for non-clinical people. He paid for me to get my Master's in Health Administration."

As an author, Housley's library included, "Hospital Materiel Management," a 368-page hardcover reference manual he published through Aspen Systems Corp. in 1978. His other major literary work was the 602-page hardcover book, "Strategies in Hospital Materiel Management," which he published through Aspen in 1983. Both became blueprints for progress in the profession in the 1980s. Housley also edited the digest-sized journal "Hospital Materiel Management Quarterly" faithfully for years.