From humble beginnings delivering grocery orders on a bike and Western Union telegrams
on weekends in Crown Heights, Brooklyn native Alan B. Miller grew up and went on to build
a Fortune 500 Healthcare Company
By Palmer Hasty
Immediately following the hostile takeover in 1978 of American Medicorp, his first healthcare venture, Brooklyn native Alan B. Miller went down the street with five associates and created the healthcare management company Universal Health Services (UHS), that today, is a Fortune 500 company employing 66,000 people worldwide while earning annual revenues exceeding $8 billion.
With Miller still at the helm, this year Universal Health Services celebrates its 35th anniversary as a forward thinking, financially rock solid healthcare company that owns 25 acute care hospitals and 187 behavioral care facilities in 37 states as well as 18 healthcare facilities in the UK.
In a recent interview with the Brooklyn Eagle, Miller recalled the early days of the company.
Laughing, Miller said; “Back then I didn’t know you could own hospitals. But in fast growing areas like Florida, Texas and California, they didn’t have hospitals, so it was an opening for entrepreneurs.”
Miller said he had been working eight years for the iconic advertising agency Young and Rubicam in New York. He was the advertising giant’s youngest vice president. He had just gotten married when a friend, his roommate at Wharton Graduate School, came to him with an idea:
“I’ll tell you what happened”, Miller said.
“It’s unusual. My roommate at Wharton was a finance guy. He had gone to California and when he came back he called me and said there were people out there who owned hospitals…and he thought we could make a company.
My reaction was; What are you talking about? At the time there were private hospitals here and there. His friend started American Medicorp in 1969; Miller then joined him. Four years later in 1973 the company became insolvent and Miller’s friend left the company. Miller took over as CEO and proceeded to turn the company around. According to court records, just five years later when Medicorp faced a hostile takeover from Humana in 1978, the company’s annual revenue was already at $450 million.
BE: Fighting for the shareholders: What happened with the Humana hostile takeover?
AM: “There was nothing I could do, but I didn’t give in. I made sure the shareholders and management would be protected. Our stock was around $11 per share, and they made an offer at 16. They finally bought the company at 27 and a fraction. That was the result of the fight. From September to January we were fighting in court. TWA came in with an offer at 20 but Humana came back with a preemptive bid at 27. TWA never came back.”
BE: So what did you do then?
AM: “I remember during the takeover Humana had offered me the presidency of the company, but I didn’t want it, for ethical reasons. I don’t know if they were bribing me or what. I did make a great deal of money, but nevertheless, it was devastating. I didn’t have a job and the company I had been building with great prospects, was gone, that was it. When the transaction was completed I had four or five guys who had worked with me at Medicorp, and we went up the street, rented an office, bought furniture, and started calling people saying we’re in business…we want to buy hospitals…and, basically, that’s how United Healthcare Services got started.”
BE: We revisited the hostile takeover scenario with Miller because it reveals a lot about the sterling character traits that supported Miller throughout his long and successful career as CEO of Universal Health Services.
AM: Miller came from a humble background. He was born in 1937 in the Brooklyn Women’s Hospital on Eastern Parkway and spent most of his early childhood and teens at 1640 Sterling Place, officially Crown Heights bordering East New York and Brownsville.
BE: Does your Brooklyn background influence who you are today?
AM: “I would think so. That was where I was my whole life until I went away to college. When I came back from the army I still lived in Brooklyn. Then I moved to Manhattan, and that was it. To be honest though, I was anxious to get out of Brooklyn. From my perspective as a young man I felt people sort of looked down on Brooklyn people. In those days it wasn’t one of the popular suburbs, although today it is. Back then I wasn’t necessarily happy about being from Brooklyn. So I went across the country to Utah on a basketball scholarship right out of high school.”
BE: What was it like on Sterling Place as a kid?
AM: “Nobody on Sterling Place had any money. My father had a dry cleaning store that was eventually, well, not successful. I mean to say, he struggled. He worked very hard and my mother worked with him.
He pressed pants and clothes. One of my only pictures of him is standing behind a pressing machine. It was about six feet long. You know, you put the pants in and push it down. He also delivered the cleaning.
BE: What happened to his dry cleaning business?
AM: “He was a good man and trusted people, and a lot of people never picked up their stuff…and I think that was probably the reason it did him in. That was in the 1940s. After his dry cleaning business went under…he wound up a factory worker in my uncle’s paper box factory.”
BE: Would you consider yours a difficult childhood?
AM: “I wouldn’t say that, although the truth is, we definitely struggled. But my parents were very attentive, and I knew I was loved so it wasn’t bad. Everyone on my block in the neighborhood was in the same boat.
I have one recollection when my cousin was in the army. He was going off to war. My father proudly pressed his uniform for him in the pressing machine…for some reason I distinctly remember that. My cousin was killed in Guadalcanal.” Miller paused for a moment, then said, “Not all these memories are great.”
BE: You worked after school as a kid: What kind of work did you do?
AM: “I delivered grocery orders on a bicycle on the weekends. After basketball season I delivered telegrams for Western Union on the weekends, also on a bicycle…even during winter. I always worked.”
BE: What kind of money did you make back then doing that?
AM: “Delivering one telegram I would get maybe a dime or a quarter, if that. But when I delivered a bundle of telegrams to a wedding, a Bar Mitzvah, or some big event, I would get 10 cents a telegram. So if I delivered 20 telegrams in a bundle, I would get two bucks.” (Miller laughed) “That was good money for a kid back then. I looked for those bundles, I didn’t care where they were going.”
BE: Didn’t you play on the only Jefferson High School basketball team in history to go undefeated and win the Citywide Championship back in 1954?
AM: “Yes, I played forward, I was 6’3” by then. We beat Benjamin Franklin High School in the finals. We crushed them. We went 12-0 during the season and won the four post season games at Madison Square Garden. And speaking of the Brooklyn Eagle, I remember the Brooklyn Eagle covered high school sports. In my day, and that was a long time ago, the Brooklyn Eagle was a big deal. And Milton Gross of the New York Post also covered high school sports. I remember somebody wrote that we were the best high school team of all time.”
“We walked around the neighborhood with our Jefferson High jackets on… the governor never got the reception we got in the neighborhood. Wearing our Jefferson jackets around was better than gold. We were heroes.”
BE: Do you remember your biggest rival?
AM: “Oh yea, that’s an easy answer. It was Boys High School in Bedford Stuyvesant. They were a great team. We beat them three times that year.”
Caption: Allen Miller (right), with two teammates from the 1954 undefeated Jefferson High basketball team. Photo from the March 15, 1954 Brooklyn Eagle.
BE: Winning the City Championship must have been a big deal then?
AM: “Absolutely. We walked around the neighborhood with our Jefferson jackets on… the governor never got the reception we got in the neighborhood. Wearing our Jefferson jackets around was better than gold. We were heroes. Otherwise, we didn’t have much in Brooklyn, really; we had the Dodgers of course, and then it was high school sports. Believe me, it’s true. I still have my jacket!”
The awards and accolades Miller and UHS have received over the years are too numerous to list here. Fortune Magazine listed UHS as “one of the World’s Most Respected Companies.” Miller himself has been ranked by Modern Healthcare magazine as one of the “100 most Influential People in Healthcare” for 12 consecutive years. In 2010 Miller was the inducted into the prestigious Horatio Alger Society alongside former Secretary of State Condoleezza Rice and General Tommy Franks. He has also received the Patriot Award for the work UHS has done and continues to do to help military veterans in collaboration with the Department of Defense.
The Mason School of Business at the College of William & Mary (Miller’s Alma Mater) is now housed in the Alan B. Miller Hall, which includes the Alan B. Miller Entrepreneurial Center.
BE: What is the purpose of the Alan B. Miller Entrepreneurial Center located in Miller Hall at the College of William & Mary?
AM: “Entrepreneurs have a special place in my heart. We risk everything, go out on a limb and many of us fail; and if we don’t, then we provide the jobs for the country. I’m fortunate, I started with just five guys. If we are successful, they we provide a lot of jobs. Most of the jobs in the country are from small businesses employing under 50 people, it’s amazing. So I believe the Miller Hall and the Entrepreneurial Center are ways I can be helpful, ways in which I can give back.”
BE: Can you tell us anything about the new book you are working on?
AM: “It’s about how CEOs can learn from great military leaders. I’ve been a CEO for a very long time. I’m considered aggressive and competitive, I played ball. I’ve always thought that there are similar principles in business, sports, and the military. I’ve talked about this in the company and in print for years.”
As recently as last month Universal Health Services announced the acquisition of Cygnet Health Care Limited in the UK for a purchase price of $335 million. This acquisition adds 15 inpatient behavioral hospitals and two nursing homes to the already impressive UHS portfolio.
At 77 years old, are you ready to retire yet?
AM: “At this point I’m not working for the money, I’m working because I think I can still
contribute. Someone’s definition of retirement is doing what you want to do and this is what I want to do.” He laughed, adding; “If that’s the definition of retirement, then I’ve been retired for a long time.”
All photos Courtesy of Universal Health Services, Inc. and the Mason School of Business.