Doctors Are Fighting With Their MBA Bosses

Tensions between physicians and the business school types managing them have brewed for years, as health care shifted toward relying on business people rather than clinicians to run medical centers. Now the strains are beginning to creep into public view. It can get ugly.

In Australia, outrage among a doctors’ group erupted this spring after a coroner’s investigation into the suicide of a young girl suggested that medical mismanagement was a factor in her death. Some 20 psychiatrists signed an open letter protesting the lack of a physician-led governance structure in the hospital system, according to a report in the Australian Medical Association’s magazine. Following the coroner’s inquiry, a doctors’ trade group sent a letter to the government demanding that the hospital system in question incorporate more psychiatrists in its leadership and throughout its ranks.

The incident is an extreme example of more common tensions over practices often favored by those trained in management rather than medicine. Experts say disagreements between clinicians and managers, over such things as paying doctors based on their performance, are cropping up in hospitals across the globe. Some industry insiders fear that patients may bear the brunt of the fallout.

“It’s as if the patient’s a pawn in this struggle for influence and control between physicians and nonphysicians,” says Todd Kislak, a Harvard MBA who worked for nearly a decade as a senior manager in a physician group.

The business of health care is roaring—especially for nondoctors. Jobs in the industry increased 75 percent from 1990 to 2012, but the vast majority of new positions didn’t go to M.D.s, according to an analysis published last year in the Harvard Business Review. Today, the field counts 10 managers and managers’ helpers for every one doctor.

Doctors’ offices hold an uncomplicated allure for MBA students. The health-care industry has been good to students of business, handing out consistently reliable job offers and among the highest raises of any profession, according to a survey by the Graduate Management Admissions Council. One in every 20 B-School graduates goes into health care, according to GMAC.

That trend does not sit well with some medical practitioners. “Physicians may have their faults and problems, but every one of us swore an oath at some point that we would put your interests as patients ahead of everything else,” says Roy Poses, a professor of medicine at Brown University’s Alpert Medical School, adding that executives tend to put revenue first. “If I have to work as a physician for managers like that, they may push me to do what will make them a lot more money fast, even if this would be useless, or even harmful to you as a patient.”

Hospitals run by so-called professional managers have chief executives without clinical experience or a degree in medicine. A 2009 study showed that trained physicians are the leading administrators in just 4 percent of hospitals in the U.S.

Recent research casts some doubt on whether the influx of card-carrying managers has been good for the health of Health Inc. In a 2011 performance review of roughly 300 hospitals, Amanda Goodall, a professor at City University’s Cass Business School in London, found that the ones led by physicians were ranked 25 percent higher than the average hospital. Another study, released last year, showed that hospital systems in England with more clinicians in the boardroom had lower death rates.

“Leadership positions should be held by people who have the core business expertise,” Goodall says, a description that she said doesn’t fit people who are versed in managing people rather than treating them.

Not all physicians want to be bureaucrats, however. Getting doctors to volunteer for top jobs can be stymied by their natural aversion to the C-suite jungle, Goodall says. Professional managers have “created a world in which they can live in quite happily. But that world, to a large extent, excludes the experts.”

That may change as students of medicine begin to learn about the business world. Educators have gradually warmed to the idea of teaching med students at least some of what it takes to run a business, and now more than half of all medical schools offer a joint M.D./MBA program, according to a study in the peer-reviewed Physician Executive Journal.

Making hospitals run well for patients isn’t as simple as kicking out the MBAs, however. Most agree that managers bring a crucial set of skills to health care. “Being an expert isn’t a proxy for having leadership experience and management expertise,” Goodall says.

Todd Kislak, the former hospital manager, says that doctors often “don’t have the understanding of economics finance accounting” to administer giant health-care organizations efficiently. “Hospitals are a business, and they’re also a place of caregiving.”

The only way to eliminate the tension between the businesspeople who run hospitals and the doctors who work in them is to merge the two tribes, Kislak says.

“The coats vs. the suits,” he says. “What you need is people who can wear both.”

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