Chiricosta, Rick

Rick Chiricosta’s first day in the president and CEO’s suite at Medical Mutual of Ohio wasn’t the experience of which corporate-ladder climbers dream. 

Any excitement about occupying the handsome space on the 10th floor of the Rose Building, any appreciation for the beauty of glowing wood paneling and gleaming brass hardware, was dimmed by a single thought. Two months earlier, his predecessor, Kent Clapp, had died when the private plane he chartered in the Virgin Islands crashed in Puerto Rico.

Chiricosta had learned of his friend and mentor’s death the evening following the accident, during Clapp’s annual holiday party for Medical Mutual execs at the Shoreby Club in Bratenahl. The then-president of Consumers Life Insurance Co., Medical Mutual’s group life-insurance firm in Westlake, had known something was wrong when he heard Clapp failed to show for a lunch meeting that day. That certainty intensified when he saw Clapp wasn’t greeting party guests. But it wasn’t until 7:45 p.m., when chief marketing and communications officer Jared Chaney whispered the news into his ear, that he understood why.

“You have all the emotions,” the 55-year-old says as he sits in a brown leather armchair in a corner of his office. “You think, Jeez, he’s a great friend. How could this happen to my friend? And you can’t help but ask, What does this mean for the company? What does it mean for me?” 

Medical Mutual’s board of directors named Chiricosta president and CEO about a month later. 

For the first weeks of his tenure, he worked in a tiny office down the hall from the top executive’s suite, an act of respect for the feelings of employees and co-workers who weren’t quite ready to see someone replace a man Chiricosta describes as “a beloved leader.” 

Finally, on the first Sunday in February, he moved in. Before he could, he had to pack up Clapp’s belongings. “It’s just a hard thing to talk about,” Chiricosta says softly as he stares at the desk at the opposite end of the room.

Almost three years later, Chiricosta has made this space and his position at Ohio’s largest health insurance company his own by concentrating on financial stability, protecting jobs and building enrollment, goals he’s achieving by providing health insurance more efficiently. 

But as Chiricosta tells of his rise to this office, Clapp played an important role in it. He also describes the well-publicized chaos of the late 1990s that former boss Ron Rafal, then Medical Mutual’s executive vice president and CFO, says prepared him so well for the challenge of leading the company through an economic downturn and health care reform. And he stresses a surprising factor, given his penchant for detail and planning.

“For me,” he says, “it started with luck.”

Rick Chiricosta’s first stroke of luck was learning to play tennis. 

The cost for the public-parks program in his native Springfield, Ohio — a single tennis ball each summer — made the sport accessible to the shy 6-year-old son of a Dayton-Walther engineering assistant and part-time bank teller. His skill in turn provided a scholarship to the University of Toledo. 

After graduating with an accounting degree, a major he chose after exhibiting a natural affinity for bookkeeping in high school, he accepted a job as an auditor at what is now Ernst & Young’s Toledo office. The scheduler took a liking to the new guy and gave him a coveted client: Blue Cross of Northwest Ohio. There he met then-treasurer Kent Clapp.

“He was a seasoned, experienced finance guy, and I was a rookie right out of school,” Chiricosta says. “But somehow, we hit it off.”

Clapp hired Chiricosta as assistant vice president and controller of Blue Cross and Blue Shield of Ohio’s Western Division in 1986. Three years later, Clapp recommended Chiricosta for another job: vice president of administration and CFO of the Medical Life Insurance Co. 

The Blue Cross and Blue Shield of Ohio subsidiary, located steps from the corporate headquarters in Cleveland, sold life and disability insurance to Blue Cross and Blue Shield group customers nationwide. 

Jerry Guenther, then president and CEO of Medical Life, describes the Chiricosta he interviewed as a young man of integrity with good people skills and a willingness to listen and learn. He also was extremely competitive, a trait that became apparent to Guenther when he watched him play tennis during sales conventions and incentive trips. 

“I don’t think people can see that right away when they look at and talk to him,” he says. 

Chiricosta’s years at Medical Life were among the happiest of his career. By 1997, the $50 million company had tripled in size. 

“Because we did so well, we were allowed to run autonomously,” he says proudly. “We were allowed to be creative; we were allowed to be aggressive.” 

The good times ended with former Blue Cross and Blue Shield of Ohio president and CEO Jack Burry’s unpopular pursuit of a merger with Columbia HCA, one of the largest hospital owners in the country. The Ohio Department of Insurance put Blue Cross and Blue Shield of Ohio under supervision because of the resulting corporate melee. Worse yet, the national Blue Cross and Blue Shield Association yanked the company’s right to use the instantly recognizable name and logo.

Clapp eventually gained control of the company, which reverted to using its former name of Medical Mutual. But the episode left it weakened financially. To raise money, Medical Mutual decided to sell its biggest asset: Medical Life. 

Guenther and Chiricosta were told to find a buyer. Rafal says Chiricosta’s dedication to completing the sad task — one that ultimately could put him out of work — was indicative of his loyalty to the company.

“He did it with a 110 percent commitment to getting the job done,” he says. “The experts told us we’d be lucky to get $50 million or $60 million for it. We doubled that.”  

In Dec. 31, 1997, the sale of Medical Life to Chicago-based Blue Cross and Blue Shield of Illinois was complete. 

Rick Chiricosta, uncertain about his future with his new employer and unwilling to uproot his wife and three kids, eventually joined National Interstate Corp., then located in Pepper Pike, as its CFO. Seven months later, in early 1999, Medical Mutual’s director of human resources called and asked if he was interested in coming back, this time as vice president of finance and controller.

“It took me about 30 seconds to say yes,” he says. “I loved the people.”

Chiricosta knew Medical Mutual was still in rocky financial shape. But he didn’t realize just exactly how bad until after his return, when the director of accounting delivered a financial statement that showed an $18 million loss for the previous month.

“I thought, Oh, my God! What did I do? I just left a stable job that I enjoyed to come over here?” he recalls. “To some extent, I didn’t even believe the statement could be right.”

Chiricosta remembered the company’s sale of Medical Life and took inventory of its remaining assets. He arranged to sell the Rose Building, a Beachwood computer data center, and another property in Toledo to a single buyer then sign 20-year leases on them, a deal that yielded about $65 million in cash. He even engineered a $5 million sale and lease-back of the furniture. Together with similar transactions, they bought Medical Mutual the 2 1/2 years needed to regain financial footing. 

“It took an enormous amount of commitment on his part to do it,” Rafal says. “There were some people in the organization who weren’t committed. They left. They didn’t think Medical Mutual would survive. Rick believed in the people who remained, in working together as a team.”    

Despite his stellar performance, Chiricosta was not promoted to CFO when Rafal retired in 2001. He admits that seeing an outsider get the job was terribly disappointing. 

“Not many people could have held their feelings in check and done their jobs as well as he did,” Rafal says. “He didn’t let his personal feelings get in the way of creating an 
opportunity.”

It came in 2006. Clapp told him the noncompete clause in the Medical Life sale agreement would expire Jan. 1, 2008, and asked him to start a new life-insurance company.

“It was a fabulous opportunity and a nice reward,” Chiricosta says.

Rick Chiricosta never expressed interest in occupying the president and CEO’s suite at Medical Mutual of Ohio. In fact, he was surprised when he was among five internal candidates expected to be interviewed by the board of directors. Moreover, he wasn’t completely sure he wanted the position. “I was very happy in my job,” he says. “And I got along with the other candidates.” But he agreed when asked to meet with the board.

“Had it not been for the strong outpouring of support from internal people and a handful of outside people, … I don’t know if I would have done it,” he says. 

Chiricosta’s interview was scheduled for 5 p.m. on Jan. 11, 2009, at the Ritz-Carlton, Cleveland. He arrived without charts or graphs, without making any lobbying phone calls or visits to board members. Board member Sam Miller, co-chairman emeritus of Forest City Enterprises, recalls that he was impressed by the down-to-earth Chiricosta’s accessibility and earnestness. 

“He’d been a servant first,” Miller says. “There’s nothing better than a servant leader. They know all the problems of being below a leader. And when they become leaders, they appreciate those problems.”

At 10:30 the next morning, board member and acting CEO Charles Bryan called Chiricosta and offered him the job. 

Chiracosta still struggles with being the face of the company. “I’d be just as happy if I was anonymous,” he says. 

But he’s very comfortable making the decisions to secure Medical Mutual’s future. He’s done away with extracurricular for-profit activities such as using the company information-technology department to provide services to other companies. 

And he’s decreed that no vacant position can be filled until the supervisor attends a human-resources committee meeting and justifies the hiring. As a result, 95 percent of the 200 jobs cut during his tenure have been eliminated though attrition. 

Profit margins have been trimmed after careful analysis. And the number of states other than Ohio where the company is pursuing expansion has been narrowed.

“Everybody in the organization would tell you the goals we have to grow our enrollment are much more challenging than the goal we had four years ago,” he says. “But to me, it’s incredibly important. It drives everything else that we do.”

Chiricosta believes all of these moves will help Medical Mutual prepare for health care reform, which requires significant investments in computer systems, people and processes.  

He concedes that not all of his decisions have been popular. But he believes that, given the circumstances, his predecessor, mentor and friend would agree with many of them. 

“I think,” he says, “that Kent would be proud.” 

CHIRICOSTA'S CAREER TIMELINE

1956: Rick Chiricosta is born in Springfield, Ohio. “I describe my upbringing as perfect. My parents were awesome. But we didn’t have a lot.”

1964: Chiricosta’s uncle gives him his first 45 rpm record, “Travelin’ Man” by Ricky Nelson, which begins an obsession for collecting vinyl that now fills his basement.

1976: Beats 1975 state Division I high school champion Jim Flower during a match between The University of Toledo and The Ohio State University. “I played Jim Flower in junior tournaments from when I was 11 to 18. I was never considered to be of his caliber. And Ohio State never thought I was worthy. The coach trashed me.”

1978: Graduates from The University of Toledo and takes a job at what is now Ernst & Young’s Toledo office.

1982: Marries Sheila Hart, whom he met while both were playing tennis for The University of Toledo. “She was cute, she was fun, and she was normal.”

1984: Accepts a position heading the internal-audit department at The Toledo Blade, a Toledo newspaper that was an Ernst & Young client. “The Blade owned three or four TV stations around the country, three cable systems, a radio station and a couple of other newspapers. I said, ‘You really need to start developing an audit department.’ They said, ‘Great suggestion. Do you want the job?’ ” 

1986: Hired as assistant vice president and controller of Blue Cross and Blue Shield of Ohio’s Western Division.

1986: Meets his musical hero Burton Cummings, former lead singer of The Guess Who, after a solo show in Toledo. “I bought the entire second row. I took all my friends.”

1989: Moves with his family to Cleveland so he can become vice president of administration and CFO for the Medical Life Insurance Co. “It was a big deal at the time. My wife was Toledo homegrown. Her family had a business there. None of her family had ever left Toledo.”

1997: Medical Life Insurance Co. is sold.

1998: Joins National Interstate Corp. as chief financial officer.

1999: Returns to Medical Mutual as controller and vice president of finance.

2006: Undergoes triple-bypass surgery. “I’m not going to say it woke me up and totally changed who I was. Honestly, I always had a decent balance between home and work. Maybe I mellowed a little bit.”

2009: Accepts the position of president and CEO at Medical Mutual of Ohio. “I officially wasn’t put in this job until Feb. 1. But the reality is that I started doing the job Jan. 12.”

LIFE LESSONS FROM RICK CHIRICOSTA

I don’t think I’m a beloved leader. But I think I’m very much appreciated.

I’ve always taken pride in my objectivity. I’m not going to blow up a product, situation or business relationship just because I don’t like it. I deal with things because there’s data and evidence that suggest they’re not good for the organization.

You’ve got the president of the U.S. saying that all health insurance companies are evil. We’re not evil. We try to do the right thing. We try to help people. We certainly don’t look for excuses not to pay claims. 

And I’m very happy with some of the things that are going to happen with reform: “I lost my job, I’ve got a sick wife, and I can’t get coverage for her”: I think that’s wrong.

Toward the end of [my interview for president and CEO], I was sitting right across from Sam Miller. He looked at me and said, “You know what I like about you? You treat this company’s money like it was your own.” 

I really believe that someday there’s going to be a movie made about our company. 

I’m a big sports fan. We’re the official health insurer of every major pro sports team in Ohio except one: the Cincinnati Reds. We haven’t quite been able to pull off getting their health business. So I thought, Well, maybe we can get their life and disability business. We made that one of our targets and pulled it off, which was terrific. The Reds know that we’re going to be relentless. We are going to have them on our list of health customers before I retire!

The nice thing about tennis, in singles, for sure, is that you’ve got nobody to blame and no one else to get the credit. You win, you did it.

There’s nothing I like more than going to a good concert, unless it’s one of those where you have to stand behind people all night long.

My one disappointment is that I’ve never been able to master an instrument. Maybe someday, if I retire, I’ll work on that.