An emerging leadership position.

Greater reliance on capitated contracts is creating a gap in leadership between acute and managed care. For seasoned physicians, with experience in relationship-building and negotiating with insurance companies, HMOs, and other payers, it is in opening window of opportunity. A new physician executive position enhances the ability of hospitals and health systems to more fully integrate delivery of care, and thus attract managed care contracts. It may be titled Vice President for, or Director of, Medical Management, and may be located at a hospital, a health system's headquarters, or at a hospital's MSO.

This position complements the traditional role of a hospital Vice President for Medical Affairs (or Medical Director), as well as the role generally played by the Medical Director in a managed care organization, linking them via a continuum of responsibilities. In the area of utilization management, for example, a typical hospital Vice President for Medical Affairs reviews physician utilization patterns and verbally reprimads outliers. At the other end of the continuum, the Medical Director in a managed care organization may seriously penalize an overutilizing network physician. Between these two, the Vice President for Medical Management may intervene to help an overutilizer better manage delivery of care.

The job and the hot appendix

The Vice President for Medical Management must have a solid understanding of the interrelationships among four areas of hospital management to attract, secure, and benefit from managed care contracts: quality assurance, utilization management, medical policy, and disease management. As an example of how the Vice President for Medical Management might use his or her knowledge in these areas, consider the hot appendix. A managed care organization has a protocol for appendectomies. The protocol covers appropriate services, the timing and location of their delivery, and the dollars to be spent. Physicians in the managed care organization are expected to hew to this protocol in the vast majority of cases.

As yet, many hospitals have no similarly systematic approach to managing appendicitis or most other ailments). Usually, they take in a patient needing an appendectomy, do the necessary tests and procedures, then send the patient home. The hospital's leadership does not include a physician executive who grasps the inter-relationships among quality assurance, utilization management, medical policy, and disease management, and who can also communicate with and motivate the medical staff to be consistently more efficient and quality-oriented. The Vice President for Medical Management fills that gap.

Job responsibilities

In the four years since Jeffrey Dunn, MD, MBA, left academic surge, he has seen a blossoming of opportunities for physician leaders who are qualified to take on the broad scope of responsibilities of this new position. Previously Director of the Pediatric Cardiology Institute at Temple University Hospital/St. Christopher's Hospital for Children in Philadelphia and now Vice President for Medical Affairs at Montgomery Hospital in sub-urban Philadelphia, Dr. Dunn believes his responsibility "umbrellas virtually every function in a hospital." Managed care demands high quality and efficiency, so that the key to the survival of a health system is the integration of all patient services to provide appropriate outcomes. The major role of a Vice President for Medical Affairs or Medical Management is integrating all clinical care to achieve this.

Generally, a hospital Vice President for Medical Management reports directly to the hospital President and CEO and has the following responsibilities:

* Manage physician resources, including

development, planning, performance

evaluation, and compensation

oversight.

* Integrate inpatient and outpatient

care, including the linkage of ambulatory 

services with managed care.

* Build bridges between hospital-based

critical pathways and ambulatory

practice guidelines.

* Guide clinical information system

development.

* Provide leadership in clinical consolidations.

* Use data to monitor/contain clinical

care costs in departments, divisions,

and at the practice level.

* Negotiate with payers; acting as point

physician for hospital/system, as

coordinator of contracting, and as

manager of all at-risk contracts.

* Participate in hospital strategic planning,

utilization management, quality

assurance, communications, fiscal

decision-making, insurer/physician/

hospital relationship development,

and risk management.

Dr. Dunn is now accountable for the following tasks:

* Growth of the hospital's primary care

practices and its affiliates.

* Support of the independent physician

organization.

* Supervising the quality and efficiency

of critical care -even though the critical

care function is run out of the

Nursing Department. * Budgeting and financing, especially

in regard to strategic planning for the

future.

Job qualifications

Candidates qualified to be Vice Presidents for Medical Management will be board-certified physicians with at least 10 years of clinical practice experience, as well as five to 10 years of experience in medical administration, including quality assurance and utilization review responsibilities. They will have an accomplished track record in clinical consolidation, clinical integration, and clinical outcomes program development. In addition, they will have a sophisticated grasp of computers and an understanding of hospital finance. Advanced degrees in business or health care administration are desirable.

Hospitals and health systems are seeking candidates with consensus- and team-building skills, candidates who can produce win-win results in a manner that engages the respect and cooperation of medical and administrative staff. Since creating and maintaining relationships both within and outside the hospital (see Table I) is at the heart of the job of the Vice President for Medical Management, hospital physician executives must demonstrate leadership abilities, as well as an appreciation of the mindset of their counterparts in managed care organizations. Maturity, fair-mindedness, tactfulness, and a participative, collaborative style of management are required.

TABLE I THE VICE PRESIDENT FOR MEDICAL
        MANAGEMENT WILL WORK WITH...

    Internally                         Externally

Board of Trustees              Managed Care Organizations
System Level Executives        for contracting, utilization
Government and Other
and Staff                      Administrative Leadership
Regulatory Agencies            Community, Trade Professional
                               Associations
Medical Staff Leadership
                               Affiliated and Unaffiliated
Attending and Hospital-Based   Tertiary Specialty
Medical Staff                  Hospitals and Physicians

IPA, PHO, MSO Leadership       Non-Acute Service
and Staff                      Organizations (Home Care,
                               Behavioral Health, Rehab,
Salaried Physicians/           Long-Term Care)
Owned Practices

Utilization Management Staff

Patients                        Patients

Not to be overlooked is the Vice President of Medical Management's key role as the hospital/health care system's agent of change. Candidates for this position must be politically astute and diplomatic enough to persuade sophisticated and intelligent professionals to modify long-standing behaviors.

Marketing maturity

and the emerging position

In many health care organizations, the position of Vice President for Medical Management is still just a concept hovering on the verge of implementation. In others, it is showing up on the organizational chart for the first time. And, in a small but growing number, it is an active position already filled by a physician leader.

We have observed a definite connection between the development stage of the market in which a hospital or health system operates, and the degree to which that organization has moved toward putting a Vice President Of Medical Management into place. The greater the degree of integration a health care organization has achieved. and the more mature the markets it serves, the more likely it is that it will have a Vice President for Medical Management. Table 2 illustrates the five predictable stages that health care markets generally pass through as they move from traditional fee-for-service financing toward more managed care. and capitation. Hospitals across the country are at different places along this continuum. Accordingly, they tend to have different organizational configurations. In the vast majority of cases, they have evolved to Stage 1 or 2 in terms of actual, everyday practice.

[TABULAR DATA OMITTED]

By the time most hospitals reach Stage 3, they are likely to have banded together locally, and by Stage 4, they have evolved into regional systems. In the final stage of market development, which will be dominated by managed care, they have matured into fully integrated hospital networks.

It is at Stage 3, where the hospital or health system begins to assume real risk and to manage primary care under capitation, that the need for more sophisticated physician leaders arises. By Stage 4, which features large organizations offering corporate support for diverse, far-flung field activities, such leaders are absolutely required. Indeed, with full integration, there may well be a need for a Vice President for Medical Management at the corporate level, as well is individuals doing similar jobs for their own hospitals or health systems within the integrated network overseen by the corporation.

The Medical Director/

Vice President for Medical

Management

Early in market development, a traditional hospital Medical Director often plays a figurehead role in attracting the interest of managed care contracts, but the negotiation of such contracts is usually done by the hospital's marketing department. As the market matures, however, a hospital or health system needs a hands-on physician leader who can take more control over negotiations, delivery of services, quality assurance, utilization management, product/service development, and more.

Some physicians who have worked as conventional hospital Medical Directors can step into this role. However, the scope of the Vice President for Medical Management's job is relatively broad. Customarily, most of a traditional Medical Director's responsibilities have focused on medical staff office matters, credentialing, and relations between medical staff and hospital. The job may be part-time, and often it is held by a well-regarded senior physician from the hospital's own staff. Dr. Dunn calls it "a pretty circumscribed role that suited a health care system in which the more hospital services the physicians on staff used, the happier the hospital was. A hospital really didn't have to be very intelligent, because whatever the physicians on staff wanted, they got - and payers paid for it."

Those good old days are history, of course. That is not to say that a hospital's need for someone to act as liaison between acute care medical staff, administration, and board has disappeared. These traditional responsibilities remain for a hospital Medical Director, but his or her energies may well be overextended by having to deal, in addition, with the burgeoning obligations of a capitated health care system.

Among these obligations is the time needed for strategic planning in hospitals and health systems today. For traditional Medical Directors, "the time commitment to activities related to market-place changes such as managed care and networking has gone up," according to John Harper, MD, Medical Director at Forbes Health System in Pittsburgh. "Where once they may have taken up perhaps 5 percent of your time, now it's more like 40 percent. Much of the time involves planning."

In short, the Vice President for Medical Management position calls for physician executives whose strengths lie more in medical management than in medical affairs.

Where are these candidates now?

Candidates for the Vice President for Medical Management position in a Stage 5 market are, and will continue to be, in very high demand. They generally follow one of two paths to the new position, either first spending a good deal of time in an integrated delivery system, or having substantial experience in a managed care organization or insurance company setting.

Candidates with senior level medical administrative experience in an integrated delivery system, usually as a Vice President for Medical Affairs, are much sought-after for the Vice President for Medical Management position. These candidates will have been instrumental in the planning and development of that system, and in setting the system's managed care contracting strategies. They will have created an infrastructure that allows the system to work efficiently under capitated arrangements. They will be experienced in developing IPAs, PHOs, MSOs, and primary care networks. Their thorough understanding of managed care organizations will have come from in-depth dealings with them, including participation in contract negotiations. They are comfortable with information systems and understand the key ways in which information management contributes to the success of a managed care relationship.

Medical Directors working in the managed care industry are also in wide demand. The assumption is that they "come from the other side of the fence," with a perspective that will help an integrated delivery system more effectively negotiate capitated contracts. However, candidates with only managed care/insurance experience should be scrutinized to ensure that their skills and background have prepared them to manage a complex organization, which include driving behavioral change in some very astute professionals.

Interpersonal skills, political savvy, and a strong managerial perspective are not widely found in physicians with a background primarily in managed care or insurance settings.

Certainly some prime candidates for the Vice President for Medical Management position are right in your own backyard. Alfred Rosenblatt, MD, was at AtlantiCare Health System in Egg Harbor Township, New Jersey, for 27 years, many of them spent as Chief of the Department of Surgery at Atlantic City Medical Center, one of the System's acute care hospitals. In 1988, he. became Vice President of Medical Affairs for the Medical Center and in 1993, Vice President of Medical Affairs for the System - in effect, a Vice President for Medical Management. He also presently serves as Medical Director of AtlantiCare Health Plan, the System's managed care plan.

AtlantiCare Health System is horizontally integrated, with two hospitals, an ambulatory care facility, a foundation, and the managed care plan. Its southern New Jersey market is booming overall; it falls into the Stage 3 category and is quickly moving into Stage 4. Dr. Rosenblatt acts as the System's Chief Medical Officer and Consultant for Clinical Matters. He is responsible for developing tertiary alliances and for overall policy consulting, as well as for the System's clinical expansion. He is developing a System-wide Office for Outcomes Management, "a facilitation entity for studying outcomes at all units of the System, including development of technology assessment capabilities."

In his concurrent role as Medical Director of the managed care plan - a position from which he plans to withdraw over time - he directs quality and utilization management. In addition, he runs the plan's medical advisory committee, does the plan's credentialing, and is developing the plan's policies, procedures, and provider network. "I interact with the buyers of our managed care plan - employers, that is," Dr. Rosenblatt explains. "I am involved in demonstrating our capabilities in utilization and quality management. All of the utilization and quality management people who work for the plan report to me."

Most of his administrative training came with his role as Chief of Surgery, he acknowledges. "But I'd strongly recommend that someone coming into a job like this one with less hospital experience have an MBA, MPH, or MHA."

Compensation and

prospects

The Vice President for Medical Management position offers salary plus incentives. In contrast, the traditional Medical Director or Vice President for Medical Affairs is a straight salaried position.

Dr. Harper says, "Larger hospitals in major metropolitan markets, like Pittsburgh, can offer the salaries needed to attract Medical Directors with nontraditional backgrounds - perhaps MBAs or MHAs in addition to the MD, and substantial managed care experience." Nationwide, our firm has seen a rapid upswing in compensation for Vice Presidents for Medical Management.

A hospital or health system considering a candidate who is currently a physician executive serving as Chief Medical Officer in an integrated delivery system, or who is a managed care organization executive, and who possesses all the qualifications and characteristics described earlier, needs to tailor its compensation offering carefully. These candidates will expect the offer to compete, for example, with the compensation commonly offered to a corporate Medical Director in a managed care organization. In such an organization of substantial size (more than 100,000 covered lives), base compensation now exceeds $250,000, and an incentive award of an additional 25 to 30 percent is not unusual. Long-term incentives in the form of stock options (in publicly-held companies) are often added to the package.

The prospects for physician executives prepared to move into the Vice President for Medical Management role, and for hospitals and health care systems that support such a position, are very bright. Dr. Dunn summarizes the change that has unlocked this new window of opportunity for qualified physician executives. "In the 1950s, many community hospitals moved away from physicians in leadership positions (although it's always been common for academic institutions to be led by physicians). Now, they are moving back toward them. And there is no doubt that, in this day and time, both academic and community hospitals need leaders with a clear understanding of the needs surrounding integrated health care."

George F. Longshore is President of Longshore + Simmons, a health care executive search firm based in Conshohocken, Pennsylvania. He can be reached at 610/941-3400.