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The Business Journal of Charlotte

Apples don't fall...
   4 Dunns Battle it out in Managed Care
Scott Smith Staff Writer
March 10, 1997

In just 12 years, Dick Dunn has built a reputation as one of the founding fathers of managed care in North Carolina. 
   
From assembling one of the first preferred provider organizations in the region to creating the most successful Medicaid-based health maintenance organization, Dunn has blazed an unmarked trail.

But it doesn't stop there. The patriarch of the local industry is also the patriarch of three fast-rising managed-care executives in Charlotte. Richard, 41, is the oldest son.   Laid-back, diligent and perhaps a little rebellious, he did not originally want to follow his father's footsteps, instead beginning a career as a restaurant manager. Representing employees as an independent broker, it's maybe no surprise that he chose the other side of the hall to play on.

David. 38. is the intensely competitive middle son, a former University of North Carolina at Charlotte soccer player who followed his dad down the same entrepreneurial road. creating his own company, Managed Care USA, which may one day surpass his dad's old firm before all is said and done.

Doug, 28, fills the role of the outspoken, joke-cracking youngest sibling. A sales manager with The Wellness Plan, he has found his way into managed care and seems intent on making his mark, perhaps besting his older brothers one day.

The managed care family affair, however, is no case of nepotism. The Dunn sons aren't making their way on the Dunn name. In fact. Dick and Doug Dunn are usually battling it out Monday through Friday, fighting for clients in the Medicaid market. That's apparent when they get together for a rare midweek lunch. The friendly rivalry manifests itself.

"I hear you're having some problems over there Doug says.

Dick, who now, runs Atlantic Health Plans - the top Medicaid specialty HMO in North Carolina with 19.000 members - absorbs the shot and then makes his counter-punch with subtle charm.

"The only problem I have is too many members." he says

Doug blushes a bit and gives his dad a sheepish glance as if to say, "OK, I deserved that."

Dick says he is thankful all the Dunns aren't on the same team. He takes a contrasting view to that of his fellow Florida State University alum Bobby Bowden, the Seminole football coach. In his autobiography, Bowden writes that his secret desire was to have his sons coach on one staff.

"He sees things differently than I do.",  Dick says. "My philosophy is that family and business do not mix."

His other philosophy passed on to the boys from an early age: "Don't get involved in the retail business." It's the wisdom of experience. The Jacksonville, Fla.. native spent 30 years working retail, beginning with the May Co. in Jacksonville as a store manager and then moving on to become president of Eckerd Apparel's chain of 110 stores, which include the Junction and Wrangler Ranch.

He moved to Charlotte to become merchandise manager at Ivey's Department Stores in 1968. 1n 1985,  Dunn took early retirement. and it appeared as if there would be plenty of time to hone his tennis game.

Enter the family connections.

While playing soccer at UNCC. David met Dr. Kevin Soden. the medical director for Hoecht-Celanese, who served as 49ers' team physician. Soden mentioned to David at practice one day that he was looking to start a preferred provider provider organization and needed a "pure businessman" to lead it

"I immediately thought of dad and how perfect he would be for it," David recalls. "He and Dr. Soden hit it off from the beginning."

Though he admits he didn't know the first thing about managed care. Dick was intrigued by the potential of the business. He started Health Care Savings as a table-top operation in 1985 with no idea of what to expect.

"When I started I couldn't spell PPO.", Dunn remembers. "It was very scary I didn't sell anything for nine months. I'd come home every night and my wife, Charlotte, would ask did I sell anything. I'd say, 'No, but I'm getting closer.'"

He got close enough to turn the corner in early 1986, convincing Knight Publishing Co. and Biggers Bros. to sign on. With some major players on board and a big investment from Charlottean and former Eckerd Drugs board chairman Ed O'Herron in 1987,  things got easier and the business eventually became one of the largest PPO's in the Southeast. Before Dunn sold the business to the the North Carolina Medical Society early I995. Health Care Savings was generating almost $5 million in revenue annually and serving 140,000 employees, 4,000 physicians and 70 hospitals in the Carolinas.

"He was the man for the job," Soden says. "We needed not only someone with a great sales background but someone who could go out and meet people. That was the reputation he had. Dick doesn't take no for an answer. He always finds a way to make things work."

In 10 years, Dunn went from not knowing how to spell PPO to being tagged "Mr. PPO" by his colleagues. When American Medical Security, a Green Bay, Wis., insurance company, made the move into Charlotte in early 1995 to target Mecklenburg County's Medicaid recipients, Dunn was the man they wanted to lead the fledgling health maintenance organization. Dunn left Health Care Savings to become executive director of Atlantic Health Plans in March 1995.

"If you look at his qualifications from having built a managed-care organization from ground zero, he was the perfect man for the job.", Bob Part, American Medical regional sales manager. said at the time.

Parr turned out to be prophetic. In almost a year Dunn's work with Atlantic has not gone unnoticed. Recently, Carolinas HcalthCare System paid $1.75 million for an option to buy 51% of Atlantic Health Plans.

CHS has contracted with Health Care Savings and Atlantic. Russ Guerin, CHS vice president for managed care, has worked with and watched Dunn for 10 years. He says what Dunn has accomplished has not come by accident.

"Dick is very creative," Guerin says. "He has a lot of vision and the ability to create rather than just duplicate. Most of the things that Dick gets involved with are projects that take into account his creativity. I think it says a lot about him that his sons have sort of followed in his footsteps. You can bet though, that there are a lot more people out there who have gotten into this business because of Dick Dunn."

Dunn says retirement is the last thing on his mind these days. When asked if he's close to easing up he predicts he might stay in the business another 15 years.

The lessons of Dunn's career have not been lost on his sons.  All say they have been inspired by their dad's seemingly innate ability to make something out of nothing. The Dunn name is synonymous with high expectation in the managed-care business

"It's hard to go somewhere in this business where someone doesn't know him," Doug Dunn says. "There's no question that being Dick Dunn's son adds pressure in our jobs. It holds us to a higher standard."

David Dunn says he and his brothers feed off that tradition and his father's energy.

"Part of the attraction for me in getting into this business was seeing that the excitement he had for it hadn't waned in a decade and a half David says. "That makes an impression on you,

While David, Dick and Doug hit the pavement every day in search of new members for their respective managed-care organizations, Richard does just the opposite, representing employers. Richard was the last Dunn to move into the business. somewhat reluctantly. but ultimately has the most power of any of the Dunns. As the broker for some of the biggest companies in Charlotte, he's often what stands in the way of a signed contract for Doug and Dick.

"If they want to sell something, they've got to come through me",  Richard says. "It makes for some interesting dinner conversations."

But those battles never get in the way of family. And that's what Dick Dunn takes the most solace in. Just like his companies. He's managed to build one big happy family. "When you know your sons have good jobs, enjoy what they do, and have peace of mind, well, that's a great feeling."

PO Box 220395 Charlotte, NC   28222
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