Money management, patient safety and customer service among top concerns for physician executives. (Special Report: State of the Profession).

ASK PHYSICIAN EXECUTIVE recruiters and experienced physician executives about the state of the profession today and they're bound to talk about money.

Controlling costs, finding new revenue streams, managing budgets and getting the most bang for an organization's bucks are among the money issues raised in recent interviews with six respected physician executives and recruiters.

In separate interviews with ACPE vice president Barbara Linney, the six experts addressed questions about the physician executive job market, managed care, physician executive skills and what the future holds for physician executives.

Here's what they had to say.

Money matters

Physician executives are spending more time these days thinking about money, the experts say.

As a result, new jobs and titles are being created. Some places are combining the roles of chief medical officer and chief operating officer.

They're being put in charge of budgets and taking control of large networks. Along with the expanded authority, comes more accountability for the way money is generated, allocated and saved.

"With the downsizing of the senior management team, the chief medical officer is picking up the responsibility of contracting with the 10 or 20 medical directors in the departments that must have someone on site--respiratory therapy, the intensive care unit, emergency department, radiology," says Jennifer Grebenschikoff, a principle in the physician executive search firm, Physician Executive Management Center in Florida.

"The physician executive always did the performance evaluations for this group and now he or she is doing the contracting tasks that someone in finance used to do."

She says some organizations are marrying cost management to medical management. It's a match that's working well at Catholic Health East, a 32-hospital system stretching from Maine to Florida.

Rick Afable, MD, MPH, FACP, Catholic's executive vice president and chief medical officer, says al00lowing people with medical knowledge to negotiate contacts helps ensure that physicians, nurses and case managers are truly able to perform the duties outlined in the contract.

His contract negotiators hold the title of senior vice president for medical management and managed care. Catholic has four people in these roles now and is looking for a fifth.

"The scope of responsibility is broader than just babysitting the medical staff, doing the credentialing, handling medical staff issues, quality and safety. By integrating these services, we can do a better job of giving care and a better job of getting paid for it," Afable says.

But some jobs aren't changing much, says Larry Tyler, president and CEO of Tyler & Company, a health care executive search firm in Atlanta.

"We are filling the traditional VPMA positions. I would have expected every hospital by now to have a VPMA and they don't. However, all those who have created the position are going to keep it."

Looking to the future, physician executives are going to need lots of financial savvy.

"Physician executives, whatever their tides, will be dealing with the fact that the cost of care is going up 15-20 percent a year for the next five years because the baby boomers are getting to an age where they will start to break down," says Martin Hickey, MD, MS, CPE, FACPE, president and CEO of Lovelace Health Systems in Arizona.

He says the aging patient population combined with labor costs, a shortage of physicians and nurses, drug prices, intense regulation and HIPAA are going to drive costs right through the roof. And someone's going to have to manage those costs.

Hickey adds that it's crucial for physician executives to have a solid background in business. They need to understand "the difference between revenue and expense, focusing on earnings as an end itself, being able to read an income statement and use that to tell a story about what is going on."

Russ Coile, with Russ Coile's Health Trends, agrees. "If physician executives can think about money and patients at the same time, they can be extremely successful."

Patient safety

Physician executives with the knowledge and skills to protect patients and improve safety are well positioned, too.

Frank Byrne, MD, MMM, CPE, FACPE, executive vice president of Parkview Health System and president of Parkview Foundation in Indiana says stinging reports from the Institute of Medicine and actions by the Leapfrog Group are putting safety concerns at the top of every organization's priority list.

"Physician executives who embrace and get out into the leadership of patient safety and care process redesign will be putting themselves in a very good position in the next five to ten years."

Afable compares the situation health care is facing to what the auto industry endured decades ago when American cars were forced to compete with better-built Japanese models.

The auto industry "had to reduce its costs and improve its quality because it had to compete with what was coming out of Japan. They didn't hire more people to put welds in cars. Now, one union worker, sitting behind a computer terminal, can watch his robots put a 100 welds on cars as they go down the line. In the old days, there would be 100 guys out on that line doing welds one by one. That's innovation."

"I am not saying we are going to have robots taking care of patients," he adds. "But we will take care of patients with less staff, at lower costs and with safer results. Afable says an example of how technology can help is computerized physician order entry. "Everybody thought the docs were going to fight it, but they are discovering its tremendous value as a treatment tool."

While caring for patients safely is critical, it's also important to provide care quickly and efficiently, Hickey says.

"I think PEs will be spending a lot of time with their colleagues creating service differential." Hickey says Lovelace patients can actually call up and see their primary care physician the same day, if the doctor is on duty.

How does that happen?

"Using industrial engineering principles, we looked at demand," Hickey explains. Demand was highest on Monday, then a little less Tuesday and Wednesday. The least demand was on Thursday and Friday.

"So we stopped scheduling people for follow-ups and physicals on Monday and Tuesday."

Managed care

Of course, one of the biggest impacts on the physician executive profession hinges on the fate of managed care. What form will it take in the future? Who will be in charge?

"An anchor principle of managed care was that physicians could somehow be persuaded to get in the boat and accept insurance risk. In many areas of the country that proved impossible. And in parts of the country where they did it, it didn't work out very well," Byrne says.

"Managed care is in a transition stage. Their current set of market strategies are running out of steam. If they can't stay profitable, due to price increases, some of the plans may decide to exit the field. Metropolitan and Travelers did that," Coile says, adding that he won't be surprised if a few more companies quit the playing field.

Hickey says patients will be willing to pay more to get better care.

"All the insurance companies are developing these triple tier co-pays for patient visits. If you go see this doctor who is going to admit you to the hospital we have the best deal with, your copay will be less. When you buy your insurance, you'll be asked, 'Do you want a third tier hospital that is more expensive but probably has the better doctors on it or do you want to buy the cheapest?' You'll probably buy based on your susceptibility to illness and your risk avoidance tendencies."

He says health insurance will take on some of the characteristics of car insurance. Sickly people, like bad drivers, will buy more benefits. Healthier people, like good drivers, will pay less.

"As people pay more, they are going to demand more. We will be focusing on how to make the patient happy and not be paternalistic like we have been in the past."

Communication/networking skills

The experts say organizations want their physician executives to have excellent communication and business skills, a management track record and clinical credibility. A management degree is sometimes required, as well.

"When clients want a physician executive, the first thing on their request list is extremely good communication skills--at all levels. The second is strong financial skills," Tyler says.

"Then leadership skills--they don't have to be a flag waver but they have to be willing to step up to the table and lead. If they are merely facilitators, that will not cut it. Finally, they have to deal with physicians well, which you would expect since they are physicians, but that is not always the case."

Grebenschikoff agrees. "We have lists and lists of words that we use when we describe the characteristics, but it all comes down to interpersonal communication skills--the ability to build relationships and take physicians from where they are now to a place they have never gone before and have them feel comfortable with it. You cannot stay in your office."

Hickey says physicians will be joining together to tackle the challenges of health care.

"We used to have these physician hospital organizations. That kind of died, but people will be turning back to partnerships or alignments of some type because it is going to be easier to move information around with electronic medical records, billing, claims.

Successful physician executives also must be willing to rub shoulders with business people and learn business principles, Hickey adds. And don't forget where you came from.

"Physician executives also must have clinical credibility--not that you have to be practicing now, but you have to have practiced somewhere and be able to say, 'I understand where you have been. Let me tell you about my experience,"' Grebenschikoff says.

Two of her clients this year said the candidates must have a management degree or be willing to get one in two years.

Moving on up to the top

When it comes to who will hold the top CEO job, the experts disagree on whether physician executives will take the seat or if a non-doc will get there first.

Coile says 50 percent of hospitals and health systems are looking to physician leaders to fill the CEO role.

He says many organizations still focus almost exclusively on bottom-line financials, "but at the end of the day the core business still has to be about patient care. That's why I think physician leaders are so extraordinarily well positioned."

Others weren't so sure.

"When I became president and CEO of Parkview Hospital in 1995, I was the only one in Indiana at the time. Over the next few years, the number got as high as five," Byrnes says. "Now, it is back down to one or two. I'm worried that it was a fashionable trend."

Tyler echoes similar thoughts. "The CFOs and the CNOs (chief nursing officers) are moving into CEO positions. I thought the VPMAs were going to do that, too, but I've not seen much of it lately."

However, Hickey says, "If I were a physician executive, young and starting out and I knew I wanted to be a CEO someday, I would definitely get an MBA and take advanced courses in finance. I'd try to hang out with the CFO, learn how the finance works in the organization and do finance-related projects whenever I could.

"If you can bring financial expertise to the fore along with being a physician, almost any organization will snap you up as a CEO, even the hospitals that are falling away from it. That is one of the hottest tickets in town, even more than the COO because the issue is going to be money and how do you manage it."

Richard P. Afable MD, MPH

EVP & Chief Medical Officer

Catholic Health East, 14 Campus Blvd.

Newtown Square, PA 19073

610/355-2052

Frank Byrne, MD, MMM, CPE, FACPE

Executive Vice President and President

Parkview Health System, Parkview Foundation

2200 Randallia Dr., Fort Wayne, IN 46805

219/373-3601

Russell Coile, MBA

Russ Coile's Health Trends

17102 Running Ridge Road 

Washington, TX 77880

offfice ph. 936/878-9986

fax: [phone]

Jennifer Grebenschikoff

Vice President

Physician Executive Management Center

3403 West Fletcher Ave. Tampa, FL 33618-2813

813/963-1800

Martin Hickey MD, MS, CPE, FACPE

President & Chief Executive Officer

Lovelace Health Systems

5400 Gibson Blvd. SE Albuquerque, NM 87108

505/262-3135

Larry Tyler

President and CEO

Tyler & Company

375 Northridge Road Suite 400 Atlanta, GA 30350

770/396-3939

Barbara Linney, MA, is the vice president of professional development at the American College of Physician Executives in Tampa, Fla. and a member of its faculty. She can be reached by phone at 800/562/8088 or by e-mail at [e-mail].