Trustee MARCH 2012 13IMAGE BY CHERI KUSEK

Tired of paperwork and shrinkingreimbursement, many practic-ing physicians are eager to move

from patient care to management.Meanwhile, some boards are adding amedical degree to the list of quali!ca-tions needed in their next CEO. Soundsas though the ideal candidates are lin-ing up for ideal positions, but there’s amismatch between the candidate pooland the institutions.

Many applicants have acquired man-agement credentials, often adding abusiness degree to their medical de-gree. But the broad management edu-cation they receive from businessschools has little relevance to runninga hospital. And even when physiciancandidates do have managerial experi-ence, often it is limited to clinical lead-ership roles, such as president of themedical sta". #e result is that even asboards are clamoring for physician ex-ecutives, there’s a dearth of them withthe requisite experience to be a CEO.

With few CEO-ready physicians outthere to recruit, health care organiza-tions would be wise to concentrate ongrowing their own. And rather than

sending doctors to business school,they should emphasize on-the-joblearning — a philosophy familiar toanyone who went through residencytraining. Given bottom-line or businessdevelopment responsibilities for apiece of the enterprise and with appro-priate guidance, doctors quickly candevelop the operational skills that willcomplement their medical expertise.Let them demonstrate that they canlead. #en they can be judged as totheir readiness to take on senior exec-utive roles.

Indeed, two converging health care

trends suggest that greater numbers ofphysicians will be joining the executivesuite. First, after decades of focusing ondriving out costs and building marketshare, hospitals and systems now !ndthey must compete for patients basedon quality of care and clinical integra-tion with practicing physicians. Ashealth systems increasingly focus onquality measurement and reporting, aphysician leader who has devoted a ca-reer to providing health care could bea better !t than a nonphysician admin-istrator.

At the same time, many physicians

Physicians in the C-SuiteHospitals are lookingfor a new kind of leader, but are today’s docs ready?By John Denson and John Ferry, M.D.

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14 MARCH 2012 Trustee

who are tiring of the treadmill, wherethey spend too much time on insur-ance paperwork and too little time onpatient care, have gone to work for hos-pitals. And many of those newly em-ployed physicians would prefer to bemanaged by someone with an MD af-ter his or her name and, indeed, thishas long been common at academicmedical centers.

Despite the trends, physician CEOsremain a relative rarity. According to a2009 study in Academic Medicine,fewer than 235 of the nearly 6,500 hos-pitals in the United States were run byphysician administrators. Clearly, thetraditional paradigm, in which doctorsfocus on patient care and nonphysicianmanagers run day-to-day operations,remains dominant. Although it haslong been suspected that having physi-cians in leadership positions is valuablefor hospital performance, until re-cently, there was no empirical data tosupport this viewpoint.

But a recent study published in So-cial Science & Medicine suggests thathaving a physician in charge at the topis connected to better patient care anda better hospital. Based on a review of300 top-ranked American hospitals,the study found that overall hospitalquality scores were about 25 percenthigher when doctors ran the hospital,compared with other hospitals. Forcancer care, doctor-run hospitalsposted scores 33 percent higher. #estudy did not posit any reasons why thephysician-led hospitals performed bet-ter, but as study author AmandaGoodall told !e New York Times, itmay be because doctors better under-stand what she called “the business ofhealth.”

Although the results of her studywere stronger than she expected,Goodall said they were consistent withother research she has done, which in-dicates that research institutions per-form better when managed by scien-tists, and professional sports teams winmore games when managed by formerplayers. Such leaders are more likely tounderstand and create the conditionsunder which their fellow core workerswill function best.

#at message resonates with MarkNovotny, M.D., chief medical o$cer atCooley Dickinson Hospital, Northamp-ton, Mass. “A hospital is not producingcars,” he says. “An executive who un-derstands the product and has the op-erational skills is in a really good posi-tion to in%uence change. #e trick is togo to the doctors and say, ‘What mat-ters to you?’ and not to tell them whatto do. When you ask, you !nd that whatmatters to them is very close to whatmatters to the trustees.

“Too often, boards and managementteams get panicky about !nancial per-formance and start telling docs, ‘Youneed to do this, you need to do that,’”he adds. “But doctors are like engi-neers; they’re very independent, verymobile. #ey’ll tell you, ‘I don’t needthis, I can leave.’”

Developing Future LeadersNovotny’s own resumé provides a roadmap for the aspiring physician execu-tive. After 20 years in private practice,he joined Southwestern Vermont Med-ical Center in Bennington as head ofits medical group. After improving !-nancial results in Southwestern Ver-mont’s physician practices, he waspromoted to CMO. At the same time,he was studying system theory, Leanmanagement, Six Sigma and processimprovement. On his watch, the hos-pital was able to improve outcomesmeasurably.

“I found that really satisfying, andfrom a medical management stand-point, it was a great way to connectwith my colleagues, even if I did take abit of razzing for wearing a suit,” hesays. When the hospital’s chief execu-tive retired on short notice, Novotnybecame interim CEO.

But while few doubt that physicianexecutives can favorably a"ect patientoutcomes, their ability to maintainbudgets and respect the bottom line of-ten remains a question. Few physicianshave had administrative training or ex-perience in !nancial management.#ey may never have written a busi-ness plan, plotted a strategy or man-aged more than a few people. A clini-cian most often works one-on-one, in

contrast to an executive who deploysteams. Only the physician who canmake that transition will make a suc-cessful CEO.

On the other hand, those teams con-sist of physicians, nurses and othermedical professionals, and amongthose individuals, a physician executivehas an element of credibility a non-physician administrator may not matchreadily. At challenging times, teammembers may adhere more strongly toindividuals like themselves — thosewho have been there and done that.

Accordingly, hospitals increasinglyare opting for an internal successionplan that includes physicians who areknown to everyone and who are part ofthe environment. But if trustees wantsu$cient numbers of physicians to beready for senior executive positions,they must ensure that their hospital’sexecutive management team is identi-fying respected medical professionalswith management aspirations and ex-ecutive leadership potential, and pro-viding them with opportunities tomanage, develop their leadership abil-ities and take responsibility for opera-tions.

Some hospitals send physicians backto school to take courses in topics likequality management, health law andentrepreneurial thinking. In conjunc-tion with certain business schools, theAmerican College of Physician Execu-tives o"ers master’s degrees tailored tophysician executives. Some largehealth systems, like Partners Health-Care, in Boston, o"er their own broadcurriculum of classes. Additionally,many business schools have addedprograms tailored to the needs of aspir-ing physician executives.

Internal Opportunities#ese are all worthy endeavors, butcourse work is no substitute for directexperience. Studying !nance or nego-tiating skills is not the same as owningthe bottom line for an operating unit orfacing o" against an adversarial bar-gaining unit. Even clinical manage-ment roles, like medical director of am-bulatory care, which do not involvetasks like managing capital or other key

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