The case for physician CEOs

In today's healthcare climate, who is best suited to lead?

The Patient Protection and Affordable Care Act has spurred many changes, and though the healthcare law has also been a source of contentious debate, it is credited with catalyzing the shift from volume-based to value- and quality-based care delivery models. While HHS' recently announced ambitious plan to overhaul fee-for-service payments might create serious challenges for some organizations, its objective — to steer healthcare's focus to deliver more patient-centric, high-quality care — is a highly valued goal.

With increased attention paid to value in care delivery and clinical outcomes, in addition to efforts to enhance the coordination of care and population health management, the argument for physician-led hospitals makes sense. However, according to the American College of Physician Executives' June 2014 report, only approximately 5 percent of hospitals leaders are physicians.

Conventional knowledge suggests physicians should focus on clinical care while managers with business or administrative backgrounds command hospitals' daily operations, but this notion is likely outdated, if not fundamentally flawed.

Little research has been done to assess the relationship between physician-led hospitals and clinical outcomes. However, an often-cited 2011 study published in the journal Social Science & Medicine by Amanda Goodall, PhD, found among the 300 American hospitals top-ranked by U.S. News & World Report, overall hospital quality scores were about 25 percent higher in those with physician CEOs compared with hospitals run by managers with nonmedical backgrounds.

Dr. Goodall makes it explicitly clear that her findings do not suggest a causal relationship between physician-led hospitals and quality performance. She points out in her report, "The findings do not prove that doctors make more effective leaders than professional managers. Potentially, they may even reveal a form of the reverse — assortative matching — in that the top hospitals may be more likely to seek out MDs as leaders and vice versa. Arguably, however, the better hospitals will have a wider pool of CEO candidates from which to choose, because of the extra status and wealth they attract."

While at this point it is impossible to conclude physicians make more effective hospital leaders than individuals with nonmedical, business or administrative backgrounds, physician leaders do possess the clinical experience and insight into the frontlines of healthcare that administrators often lack.

The characteristics of a physician leader

Gary S. Kaplan, MD, who is board certified in internal medicine, has served as chairman and CEO of Virginia Mason Health System in Seattle since gary kaplan virginia mason2000. He has been practicing medicine for the past 34 years and still sees patients today. He says physician leaders can yield great benefits to healthcare organizations.

"Today's healthcare environment is characterized by tremendous change," says Dr. Kaplan. "When leading change, understanding the challenges and opportunities for clinical care teams at a deep level allows us to emphasize the priorities of quality, safety and respect for patients as well as care teams. It's not essential that CEOs be physicians, but in today's environment, having a physician at the most senior levels of leadership certainly helps change management and organizational success."

This success is largely due to physician leaders' decision-making processes.

Anthony D'Eredita, executive vice president of the Advisory Board, says physician CEOs tend to approach their decision-making through the lens of the clinical delivery model. "They work these models to respond to the business and market demands that are required to be successful, but they originate from a clinical perspective because that's their training and expertise," he says. "At the end of the day, it's a clinical business."

anthony dereditaWhile traditional non-MD leaders can still form a nuanced clinical perspective, they haven't trained and lived in that world, he points out.

In addition to physician CEOs' natural instinct to make decisions through a clinical lens, Mr. D'Eredita also suggests physician leaders are strong decision-makers by virtue of their training. They tend to be more decisive and focused on execution.

One of the most notable features of a physician-led hospital is the peer-to-peer trust that exists among clinical colleagues. According to Mr. D'Eredita, this automatic sense of trust and understanding based on a shared background probably creates a stronger dynamic than between physicians and non-clinical leaders.

"Physician leaders are viewed more as a peer to physicians because there is a sense of collegiality that comes from having a leader within the same profession as employees. That's just natural," says Mr. D'Eredita.

The various skills, experiences and medical knowledge physician leaders bring to the table are advantageous for leading a healthcare organization. Of course, not all physicians make great leaders. CEO candidates who are physicians must demonstrate the aptitude to lead others and be responsible for the administrative and business duties inherent in the position.

"It's not just a physician and non-physician distinction," says Mr. D'Eredita. "You have to consider the leadership expertise of the individual, because a physician without leadership skills will be an ineffective leader. Strong leadership brings together both clinical and business expertise, and is often not in one person but spread across an executive team."

According to Dr. Kaplan, the most effective leadership teams are comprised of a combination of clinical, business, patient- or consumer-focused members that can contribute a variety of multidisciplinary skills and experiences.

"A team-based model of leadership has tremendous strength, depth and opportunity for unique perspectives and skill sets that can be brought forward," he says.

Physicians lead for patient-centered care

According to Mr. D'Eredita, there is already a growing movement among physicians to obtain and develop leadership skills and experience. As healthcare transforms to make population health management and patient-centered care some of its highest priorities, the need for clinical leadership is becoming more apparent. In response, the role of the physician leader is evolving.

"In the past, physician leaders' primary roles were to serve as advocates for physicians' interests," says Dr. Kaplan. "In today's world, we need less advocacy leadership and more leadership focused on sponsoring change and improvement for our patients."

This need is understood equally by for-profit and nonprofit systems, Mr. D'Eredita notes. Both for-profit and nonprofit organizations have added people with clinical backgrounds to executive teams, or taken other measures to ensure executive initiatives are analyzed through a clinical perspective, such as by creating physician advisory teams to provide clinical feedback to administrators.

Continuing to grow physician leaders for the future

According to Dr. Kaplan, there is an increasing number of young physicians who know early in their career that they want to pursue leadership positions. At Virginia Mason, encouraging physician leadership at all levels of the organization is part of the culture.

"I think physicians getting MBAs or MHAs or other leadership certificates in management is much more common than it used to be," says Dr. Kaplan. He believes leadership is not something a physician develops in his or her spare time, but something that takes formal training, skill development and experiential opportunities.

However, Dr. Kaplan says he always tells young aspiring physician leaders to focus first on being a good clinician. Then they will have earned the respect that can be a platform for taking on leadership roles with the support of colleagues and peers.

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