Jackson & Coker Industry Report
 
Special Report :

The Evolving Role of Physician Executives

By J&C Research Associates

The best leaders tend to work their way up from within an organization: such is the case in most industries, and health care is no different. This is especially true in the modern health care industry, where large care organizations provide physicians with the opportunity to take on managerial and administrative roles. Whereas in the past physicians remained largely medical practice-oriented and accrued responsibilities with experience, modern physicians are strategically applying their knowledge of care delivery in management positions. Across the health care industry, organizations–from hospitals to large physician groups, clinics, insurance companies, and nursing homes–are seeing better and better reasons to bring on leadership with experience in practice. This tendency–in combination with increased willingness to pursue managerial education–has resulted in a new generation of physician executives that has the potential to significantly alter the future of health care in this country.

Any number of reasons could contribute to a physician’s decision to pursue management: a better personal disposition toward management over practice; or simply the need for new challenges. For some, it is a desire to affect change in the health care system from the top down. “Doctors,” according to Charles Evans, President of the International Health Services Group, “want to provide great care first and foremost. Being an executive is an avenue to having more influence in improving care.”[1] Upon assuming a management role, he continues, “their core mission hasn’t changed, just the means in which they contribute to care.” No matter the reason, the decision to enter management is not one to be made lightly: physician executives must look to guide organizations in the midst of rising costs, new regulations and technologies, fluctuations in the economy, and demographic shifts.

Health organizations in the midst of a leadership search are, of course, looking first to executive experience, but they do view clinical backgrounds as a bonus. According to Evans, physicians can count on their clinical experience helping them land a management position, but they shouldn’t count on it exclusively. With proper training and experience, however, physicians can expect “nearly unlimited opportunity... a greater and greater breadth of opportunities in hospitals and health organizations.”

Back to School

And what sort of preparation is involved? A master’s degree is a good start. Across the nation, doctors are going back to school to earn degrees in management. One indication of this trend can be seen in the number of universities offering management degrees designed specifically for physicians. A sample listing from the American College of Physician Executives includes over 30 universities that offer such degrees, including Ivy League and other prestigious private and public universities across the country.[2] Physician executives that have acquired master’s-level management degrees typically hold a Master of Business Administration, Master of Public Health, Master of Medical Management, Master of Health Administration, M.S. in Healthcare Management, or a dual degree combination of these.

Certifications in health care management are another credential that prospective physician executives add to their résumés. Three of the most common certifications are: Certified Physician Executive (CPE), Fellow of the American College of Physician Executives (FACPE), and Fellow of the American College of Healthcare Executives (FACHE). All three certifications require a master’s degree, usually in management, or a certain number of credit hours completed in management education. Physicians holding CPE certification are particularly numerous: the Certifying Commission in Medical Management has approved 1486 CPEs, almost all of whom have an M.D., Doctor of Osteopathic Medicine degree, or foreign medical degree.[3]

In addition to Masters-level programs that often cater to doctors’ busy schedules, organizations such as the American College of Physician Executives and American College of Healthcare Executives offer medical management and leadership training in the form of seminars, short-term programs and web-based study. On-the-job training and experience are also vital to a physician’s preparation to become an executive, whether it is through volunteer opportunities or assuming more and more managerial responsibilities in incremental steps while still in practice. In a survey of Chief Medical Officers, 58% of respondents cited on-the-job training as the most important preparation.[4]

Recognizing the need for leaders with clinical as well as business expertise, more health care organizations are requiring that physician executives hold graduate business degrees and are arranging their pay scales accordingly. According to a 2009 physician executive compensation survey conducted by ACPE, 33% of executives hold a graduate business degree. Physicians with business degrees earned 10% more on average than those without, and salaries also differentiated within specific executive positions by degree type: CEOs earn 22% more with an MBA while department chiefs earn 25% more with an MMM. Executive bonuses are more frequently found to be driven by financial and clinical performance: 62% of executives cited cost containment and profits as determinants of their bonus, whereas 53% cited clinical outcomes, safety, and processes as part of bonus pay. Since 2007, the frequency of executives citing financial or clinical performance as components of their bonus compensation increased, 60% and 67% respectively.[5]

As to the prevalence of these degrees among practitioners, the best data comes from the ACPE, which has maintained credential information on physicians participating with the organization since 1990. A study of ACPE’s information reserves uncovered a number of trends at work with regard to physician management education.[6] First, MHAs and MPHs are losing interest among physicians and have been since the 1990s, while MBA and MMM degrees are more favored among physicians. Law degrees are the third most popular degree among physicians, as they are helpful in training for the issues physician executives deal with on a regular basis. ACPE has also found that among physicians holding management degrees, 66 percent were currently in or had previously served in a management position in a health care organization. Of those, nearly eight in ten held a senior position prior to earning the degree. That means that advanced management degrees aren’t necessary to take on a senior management position, but a large number of physician executives are finding that, upon assuming the management role, an advanced management degree is just about indispensable in order to ensure that one thrives in that role.

Rising C-Levels

Reflecting the abundance of challenges that physician executives face, various executive roles and job descriptions have arisen in the industry. Titles, job descriptions, and duties vary from organization to organization, but the following list encompasses most of the positions typically occupied by practitioners in management.

  • Chief Operations Officer - The COO leads the organization’s core business--patient care--but can also oversee many other clinical and administrative support functions. The COO may also fulfill the role of CEO-in-training as part of succession planning.

  • Chief Quality Officer – Patient safety, quality, and transparency have become a main focus of the public and the government. CQOs will have a research and analysis orientation in order to monitor and improve clinical performance by studying outcomes and creating quality improvement.

  • Chief Technology Officer – Sometimes called a “chief knowledge officer,” this is a research and innovation expert for larger organizations, including research institutions and academic medical centers. They look for new technologies to improve clinical outcomes and also contribute to medical product development.

  • Chief Strategy Officer – While CEOs are usually more focused on internal operations and quality, a CSO can contribute to the development and implementation of a large organization’s long-term strategy. Health organizations covering a large geographic area may especially need a CSO to look at trends in the health care market and develop strategies to attract patients.

There are, of course, management opportunities for physicians outside of the C-suite, and a physician need not have his eye on a specific management position in order to benefit from management training. Some practitioners have found that management skills are helpful even in negotiating contracts with vendors and independent practice associations, situations in which familiarity with concepts such as cost structures is essential.[7] Additionally, physicians are getting into management positions in all levels of government, be it within a Veterans’ Administration hospital or a state or county public health organization.

Even aside from explicit management roles, physicians can serve in leadership roles while practicing medicine by serving on boards or committees. As Evans points out, “The more physicians understand management and leadership issues, the more effective they’ll be in helping to solve them.” And while we pointed out earlier that some physicians seek executive roles in order to influence the industry from the top-down, industry insiders like Evans strongly believe that physicians empowered with even modest amounts of management training will be an essential force in reshaping health care from the bottom-up. “Many of the needed changes in the US system,” Evans predicts, “will happen through local initiatives with physician executives leading the way.”

Covering the Cost

Hospitals and health organizations are increasingly aware of the benefits to be drawn from having physicians in leadership roles. Around the world, hospitals and public health organizations need physicians with management capabilities to help ensure the professionalization of the industry. In the developing world, these skills are especially helpful in bringing these systems more in line with the standards of care and protocols of practice found in developed countries’ health systems. In the developed world, hospitals are seeing the benefits of management training for physicians, especially the manner in which such training broadens physicians’ perspectives beyond clinical practice, bringing them more into alignment with the necessities of the operations of a large health organization. For this reason, it’s not uncommon to find hospitals and other large care providers reaching out to organizations like ACPE to provide training for doctors to prepare them for management roles. This is a tricky territory for institutions, though, as they run the risk of running afoul of anti-kickback regulations if they were to subsidize the training of a physician not under direct employment. Still, the mere fact that large organizations are investing in their physicians in such a manner demonstrates the utility of physicians with management training. Once physicians have had the training, there’s still the transition to be made from practice to management. It’s not the easiest of transitions to make; so a number of institutions provide incoming physician executives with mentorship opportunities to ease the transition wherever possible.

Management Material

So how do you know if you’ve got what it takes for management? Surviving as an executive today requires the ability to establish and maintain positive relations between a number of constituencies that make up the modern health care world, all with the goal of marshaling these different actors toward the greater clinical and financial health of an institution. Thus, excellent leadership and communication skills are necessary, as well as a high tolerance for ambiguous, complex, and dynamic environments and markets. A knack for numbers helps also, as executives are likely to run across fiscal accountability and budgetary issues. These are, of course, skill sets that will be honed in the course of a management education; but it’s likely that the best executives will be those physicians already predisposed toward these sorts of interests.

Above all, future management candidates have to love a challenge. Taking on an executive role is a big commitment, requiring returning to schooling, getting more credentials, and taking on a considerably larger workload. If you’re up for the challenge, though, it’s a position that will definitely broaden your perspective, perhaps even teaching you to regard the practice of medicine in an entirely different manner.

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[1] Interview, Charles Evans, July 1, 2010.
[2] “Other Management Degree Graduate Programs.” American College of Physician Executives. www.acpe.org/
[3] The Certifying Commission in Medical Management. www.ccmm.org
[4] Kirschman, D. 2010. “What CEOs Should Know About Their Chief Medical Officers.” Physician Executive Management Center. www.physicianexecutive.com
[5] “Post-Graduate Business Degree Drives Pay for Physician Executives.” TradingMarkets.com. www.tradingmarkets.com
[6] Kirschman, David. “Advanced Management Degree Trends,” Physician Executive Management Center, April 30, 2008. http://www.physicianexecutive.com/index.cfm?Fuseaction=ArticleDisplay&ID=9
[7] Shaw, Gina. “Learning to Read,” ACP Hospitalist, January 2008. http://www.acphospitalist.org/archives/2008/01/cover_story.htm

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