Actually using mulch is a GREAT idea. Yes, it breaks down, it is supposed to.  When you have dirt, mud or smell, you add more.
Pine needles will also work, but as stated previously, aren't real absorbent by themselves.  If you top the mulch w/ them, they will allow water to filter threw.  I have found that they take longer to break down & can mat up if they aren't mixed w/ other materials of different sizes (the mulch works).
You can also add other materials, if you'd like to - ones commonly used are the pine pelleted horse bedding, sawdust, hay/straw (better if chopped smaller - mowing over it works great), pine shavings, lawn clippings, hemp, garden left overs, prunings from bushes & trees, shredded paper & cardboard (remove plastic windows).  On top of this you can put out your kitchen scraps or set up an actual compost bin.
You don't have to mix the materials. Leave for a while & your birds will naturally scratch & mix them.  If you want any area scratched more - drop some feed, scratch grains, BOSS or meal worms in that spot.  
What your run now will be using is a DLM or deep litter method. This will "digest" chicken poop & filter water trough w/o causing mud.  If it gets muddy or develops a scent, it's time to add more materials. It will continue to break down.  You don't need to clean it out at all, unless you'd like to utilize the black gold you chickens are now creating for you.  If so, rake back top layer to acess bottom layer which is now compost.  I don't ever remove all of it.