Tom Mac Mahon, chairman and former CEO of Laboratory Corporation of America (LabCorp) talked with Elon business students on March 27 about the importance of a strategic plan in building a successful enterprise. Details…
Mac Mahon delivered his first lecture as executive-in-residence in the Martha and Spencer Love School of Business. In this position, he will spend several days each semester on campus meeting with undergraduate and MBA students and the school’s faculty.
Mac Mahon has served as LabCorp chairman since 1996 and served as chief executive officer from 1997 to 2006. LabCorp is one of the world’s largest clinical laboratories, with revenues of approximately $3.6 billion and more than 25,000 employees. LabCorp has been recognized by Forbes Magazine as one of the best performing companies in the U.S., and a 2004 Forbes article featured Mac Mahon’s efforts to build LabCorp into the nation’s second-largest clinical laboratory.
Speaking to an overflow crowd at the Ernest A. Koury Sr. Business Center, Mac Mahon described the complexity of the LabCorp business operations. Every day, more than 4,000 couriers collect specimens from clinics and doctors’ offices around the country and route them to 42 medical testing facilities where more than one million tests are completed within hours.
Mac Mahon said the laboratory industry was troubled in the mid 1990s, facing government regulation, industry compliance concerns, the managed care evolution, severe pricing issues and a lack of consolidation. As a result, there was a lack of investor interest in the industry.
Mac Mahon, an Elon University trustee, said LabCorp succeeded by building on the foundation created by another Elon trustee, Dr. Jim Powell, who started the business. He said Powell provided visionary leadership in creating the Center for Molecular Biology and Pathology, a core asset of the company.
Mac Mahon said his priority in joining the company was to create a strategic plan.
“My job was to regenerate interest in the industry,” he said. “We have an amazing impact on healthcare in the United States and we’re only going to become more important in the future.”
Mac Mahon said LabCorp’s plan included several important tactics.
“We needed to communicate with shareholders, legislators and regulators and help them understand that this industry is critical to health care. Ninety percent of doctor visits result in laboratory tests and 70 percent of healthcare decisions are based on test results,” Mac Mahon said.
Mac Mahon said LabCorp decided to emphasize genomics in its growth, to expand its scope of coverage, secure national contracts and manage costs by maintaining a steady number of employees, consolidating facilities and creating single billing and lab systems.
He also said financial tactics included a preferred stock offering, a reverse stock split and a commitment to building the company’s cash position. “Cash is king,” he said. “Always understand who’s watching the cash and keeping tabs on money in the bank.”
Mac Mahon said management processes were important too. “Each executive committee member had a key strategic responsibility and they reported on their work at our weekly meetings. Follow-up and accountability is critical.”
LabCorp has chosen to maintain Burlington, N.C., as its corporate headquarters for many reasons, according to Mac Mahon. “The talent pool is here; there is the strong history of the laboratory industry, which was founded here; and the cost of doing business is lower here than elsewhere.”
Mac Mahon advised business students to have realistic plans for their lives, and make adjustments as they grow in their careers. He also said their success will depend on their attitudes toward their work.
“Be proud of what you do, like what you do and be passionate about what you do,” he said. “And if you get up in the morning and don’t like your job, go find something else.”
Before joining LabCorp, Mac Mahon held various executive positions with Hoffmann-La Roche, serving as senior vice president from 1993 to 1997 and president of Roche Diagnostics Group from 1988 to 1996. Mac Mahon earned a bachelor’s degree in marketing from St. Peter’s College and an MBA in marketing from Fairleigh Dickinson University.