Interview with George Savvides
Managing Director, Medibank Private
How did someone who studied industrial engineering at university end up becoming one of Australia's most visionary thinkers on the challenging subject of the nation's future health policy? Let alone become managing director of the only Federal government-owned enterprise that operates in a completely competitive market against dozens of powerful rivals?
George Savvides tells a story about his childhood which may explain the remarkable journey he's come through in his 56 years. The son of Greek Cypriots who arrived in Australia in 1950, George was born in 1956 - one of two children with younger sister Chrisy. His father was an electrician who worked most of his time in Sydney in factories. "I was Dad's (unofficial) apprentice," Savvides says. "It was amazing watching him fix anything and make things happen. He ended up working at the submarine base at HMAS Penguin at Balmoral. You couldn't have more fun as a kid than turning up on a Saturday to a submarine base."
By then the Savvides family had moved from Glebe to Mosman to be closer to dad's work. As a consequence, the young George went to Mosman High, and particularly enjoyed the practical part of the curriculum: woodwork, metalwork, industrial arts. So when his parents bought a block of land on the banks of the Hawkesbury River at Wiseman's Ferry "for $3000 or something stupid", George listened and learned from his father's can-do attitude.
"Dad bought an old double decker bus, an Albion, at an auction and converted it into a caravan," Savvides recalls. "Double bunks upstairs, kitchen and dining area downstairs. "A few years later when I was in my early teens, he built a house next to the bus. I watched him and learnt again. I actually did the technical drawings for that house which were sent to council because I had a T-square, could do it, and it was a privilege to play that role."
Naturally when he became the first member of his family to go to university, industrial engineering at the University of NSW seemed a good fit. Yet some of the electives he chose around his core subject in his first year gave a clue to his future ambitions. "I did philosophy of religion and existentialism," he laughs. "I didn't even know what existentialism was!"
"I rocked up to the lectures with my fuzzball hair and my Mod Squad clothes, thinking what are they talking about? I could do maths and draw straight lines, but that was it. I also enjoyed a "History of the Industrial Revolution" course which broadened my appreciation for how engineers have changed the world..." Four decades later we're meeting in the boardroom of Medibank Private's offices on the eighth floor of the iconic Renzo Piano-designed building in the heart of Sydney's CBD.
Today Savvides is still whippet-thin and still hungry for ideas. Our interview has been brought forward 30 minutes because his brief visit to his home city has suddenly become even more hectic: nowadays Melbourne is his home and headquarters. His four years spent studying engineering at UNSW were invaluable, he explains. But some of the best lessons he learnt were on the hockey field. He'd begun to play hockey at school, continued with the North Sydney Hockey Club, and still plays right wing most weekends with Melbourne University.
"I'm an old dog now, pretty bad at Hockey, but it keeps you puffing," he says. "We've got a great bunch of guys and we won gold in the Masters Games in Sydney in 2009." According to Savvides, most of what he learnt about effective corporate leadership came from his experiences on the hockey field (though his life-long Christianity must also have had an impact: raised in the Greek Orthodox church, he is now attends a Baptist church and recently became Chairman of World Vision Australia - a body he has long supported because "it's a Christian humanitarian organisation which shares its expression of faith by rolling up its sleeves to care for children caught up in poverty").
"Hockey literally got me into leading teams," he explains. "In the corporate world, leadership is not always team-based. It can be very egotistical: all about the leader, not about the team, or the mission. "But thanks to hockey, my early engagement with leadership was all around teams. "Then, after I graduated, there was a lovely segue into leadership in industrial engineering. If the factory floor processes aren't right, the production engineer needs to sit down with the production crew and say, 'How can we fix this?'. You bring together disparate operators and get them to work as a team around an entire process."
"That started to resonate more strongly when I did my Master of Business Administration at the University of Technology, Sydney." Savvides had married Vivian, a fellow Christian, in 1979 after they'd both run a drop-in centre together in Cremorne funded by local churches. His first job after graduating from UNSW had been with a company called Hability which ran a series of factories in Surry Hills, Campbelltown, Parramatta and Nowra for production workers with various disabilities.
The company, which made products like furniture and consumer goods for department stores including David Jones, had Rod Cooper as CEO, an enlightened and empowering leader who had himself taken an MBA. "My job as the group's industrial engineer was to service the four factories," Savvides recalls. "But I quickly got involved with tenders and contracts. Rod would say, 'George, are you sure we can actually make that?' And I'd say, yes, if we can design the (production) equipment properly (to creatively compensate for the workers' disabilities). The creativity I had to bring to the factory floor was: what processes can we develop that compliments the competences of our workforce?"
After Savvides had been in the job for a few years, Cooper - "a great humanitarian and a great mentor" - recommended his protégé should do an MBA himself. "I wasn't certain I could do it," admits Savvides. "So Viv and I decided I should enroll in a Graduate Diploma of Business Administration course which gave me the opportunity after two years to upgrade to the four-year MBA. "The reason I was attracted to the UTS course was that it was only two nights a week. I felt I could look Viv in the eye. But it was 6pm-9pm and I'd get home absolutely buggered with more study to do at the weekend.
"Yet I absolutely loved it. After six months I was already sold on doing the MBA. I enjoyed the UTS experience because the lecturers weren't just from the academic stream. They also employed men and women who had senior executive roles in the broader commercial market place and appointed them to the evening class faculty. They weren't just delivering a theoretical proposition but real boiler plate-tested practice with excellent case studies. When I talked to friends who were doing MBAs elsewhere I realised UTS was much more practical, but that seems to be in the DNA of UTS."
Savvides was in the inaugural UTS MBA course, then held at the university's Brickfield Hill campus at what had once been the Anthony Horden department store in George Street. His final year thesis was on how Japanese manufacturing processes which had transformed not just post-war Japan but the world economy could be applied in Australia. As a direct result, he was headhunted by McPherson Metals which was already introducing such techniques into its factories.
He then took a job which seemed to come from left field. Commonwealth Industrial Gases in North Ryde was looking for a new Head of Marketing. Savvides applied and got the job despite having no formal marketing qualifications. "But CIG was still a technical company," he explains. "We made anaesthetics, oxygen, life support systems." So his industrial engineering background was an essential component of being able to market the health products the company offered. After a couple of years, he moved up to the CEO position of the Healthcare Division.
In 1988, he was again headhunted, this time to become CEO of Smith & Nephew, Australia, a global medical supplies company headquartered in the UK. But there was a catch: moving to Melbourne. "It was a big wrench. We loved Sydney and the Northern Beaches, close to family. But we felt we could give it a go for three or four years while the children (Peter and Luke) were still small and have an adventure. It was a bit lonely for the first year, but a good lonely. We planned lots of things for the weekend around the family. And within a year, we felt at home. When the Sigma job came up in 1997 also in Melbourne, it was a good time to say 'We're here for the long haul'."
Sigma was then a Pharmacist's cooperative supplying 5000 pharmacies around Australia. As CEO, Savvides steered it through six major acquisitions and its IPO in 1999 into a public company listed on the Australian Stock Exchange. In 2001, Dr Michael Woolveridge, then Liberal Federal health minister, asked Savvides to join the board of Medibank Private, the wholly owned Government Business Enterprise health fund. "We'd just floated Sigma and I was looking for the next opportunity but within weeks Medibank Private went into a tailspin".
"A couple of things had gone wrong. After Sept 11 (2001), the investment markets collapsed. And Medibank Private was getting most of its profits from investments. At the same time it had been ruled out from increasing its premiums due to what seemed to have been a poor relationship with the Federal Government. "The Chairman asked me to stand in as Managing Director for a few weeks while we stablised the business. Well as they say, the rest is history and I'm still there."
When he took over, Medibank Private was losing $175 million a year. By 2004/5, it was making a record profit of $130.8 million. That was achieved, he says, "because I spoke to the staff and invited their ideas to fix the broken business." Years before, at Smith and Nephew, he'd help diffuse a fraught wage claim negotiation by listening to a shop steward. The four per cent national claim wasn't the workers' main concern, the unionist had told him, but the lack of job security: the worry that if they fell ill or lost their jobs, their families would be left without protection, without a bread winner.
Savvides went back and asked his HR chief how much it would cost to offer all staff the same income protection then only offered to leading executives. Millions, she said. But when she did the calculations she found, spread across the entire company, it would only cost about half a per cent of salary per person per year. Income protection was introduced across the board – it resolved the pay dispute, built trust and co-operation. Savvides has employed it subsequently to each firm he has worked for, including Medibank Private.
Savvides had no expectation that his "interim" role as MD would run for 10 years: the Labor Federal Government renewed his contract in 2012. With ageing populations, ever-increasing medical breakthroughs and health bills, he sees Medibank Private as being on the front line of a national health reform and sustainability agenda. Increasingly, he says, health funds need to become proactive, changing their focus from "health insurance to health assurance", less about paying out claims than preventing the claims in the first place through such initiatives as Mi Health - Medibank Private's 24-hour, 7 days a week health advice line, free to all hospital policies holders of Medibank.
Just as importantly, he points out, the focus needs to be on the two per cent of his customers who are responsible for 45 per cent of the claims. By improving their health through targeted prevention programs and co-ordination of care, significant savings can be made to the overall budget.
As a member of UTS's Pharmacy Advisory Board ("I'm one of a number of wise owls," he says), Savvides hopes to ensure UTS continually adapts its courses to make them relevant to modern health needs. "Pharmacy is changing as society changes," he says. "New technologies in health care such as video consultations connecting people in remote Australia with health care professionals, are of immense interest to UTS."
"Around 700,000 of Medibank's health fund members are in the aged category. That has consequences well beyond health care. We need pharmacies and other pharmacy care providers to be able to connect using new technologies with those older Australians to improve access and affordability of our health system as it carries the load on increasing population health burdens in the years ahead."
Words by Steve Meacham, March 2013