Suggestions for management training of residents.

Physicians can no longer be concerned only with the quality of medical care of their patients, unaware of the accompanying costs. Physicians, who once could employ sophisticated new diagnostic tests and treatment modalities and be fully reimbursed, are discovering that the rules of the game have Changed. Third-party payers are decreasing reimbursements and successful practitioners must learn how to deal effectively with providing good patient care despite declining reimbursements. It has been estimated that physicians control 80-85 percent of health care costs by the way they practice medicine.[1] The variety of burdensome regulations currently imposed on physicians and hospitals have been well described.[2] While the exact form national health care reform will take is unclear, it is likely that there will be even more governmental regulation of medical practice and that utilization practices will be more closely examined. Hospital-based physicians, such as pathologists, will be among the most closely scrutinized.

Close attention to the business aspects of medical practice is necessary for both personal satisfaction and for the provision of high-quality medical care.[3] Increased efforts to control costs and wise management practices will be essential for the continued success of the practice of medicine. Learning by doing has been the predominant method of management training of most physicians; however, without some theoretical background, this is likely to be insufficient. Few other aspects of postgraduate medical education are presented solely as an experiential exercise.

Management instruction has taken many forms. The American College of Physician Executives provides three one-week courses of graduated complexity called the Physician in Management Seminars. For physicians wanting more in-depth training, a variety of master's degree programs in management are available, with some programs allowing a significant proportion of home study with minimal on-campus activity.

The American College of Physician Executives has recognized the need for residents to become involved in management and has created a special category for resident membership. This includes assigning the resident a mentor in medical management and providing for reduced membership dues. Some specialty certifying boards, expecting residents to receive management training as part of their postgraduate experience, test basic management principles on their certification examinations. Residency programs need to be aware of their responsibility to train aspiring physicians in management and devise methods to achieve this goal.

Management Seminars for Residents

A series of seminars in principles of management was developed by the Veterans Affairs Medical Center in Jackson, Miss., for pathology residents. Instruction was provided by a physician faculty member with management experience and a master's degree in business administration (table, above). The seminars were held during a regularly scheduled noon hour conference slot, and all pathology residents attended. In addition to the residents, fourth-year medical students taking pathology electives attended the conferences.

Seminar Topics

  * Microeconomic Theory
  * Macroeconomic Theory
  * Reimbursement Issues
  * Diagnosis Related Groups
  * Capitation
  * Motivational Theories
  * Mission Statements
  * Organizational Charts
  * Cost Accounting Principles
  * Capital Budgeting Techniques
  * Product Life Cycle
  * Pricing Techniques
  * National Health Care Reform
  * Job Hunting Tips

The residents were divided into two groups and group leaders were selected. This was done to help teach the value of teamwork and to create a sense of competition between the teams. Readings covering basic principles of management and finance were provided. There were homework assignments involving analysis of actual case studies in management-related medical issues, and the results of the residents' efforts were discussed at the beginning of each seminar.

To evaluate the academic preparation in management of the residents and medical students, all were asked to describe their college education to indicate whether they had taken any business courses. All 12 residents and 3 medical students had received undergraduate degrees in the natural sciences; only one student had taken a business course, consisting of a single semester in economics. This is probably representative of the academic preparation in management of most residents.

The first session dealt with basics of microeconomic theory, including market supply and demand curves. After the basic principles were demonstrated using agricultural commodities, they were applied to health care. The implications of hospitals having high fixed costs and low marginal costs were reviewed. Various entry barriers to pathology and their effect on supply curves, prices of pathology services, and pathologist incomes were discussed. A general overview of present health care financing, including a discussion of diagnosis-related groups and the trend toward capitation, was presented. Homework assignments required analysis of why an increase in the number of physicians had not lowered health care costs in the way microeconomic theory would have predicted. There was also a question about what economic reasons the American Board of Pathology may have had for extending pathology training from four to five years.

The second hour dealt with management concepts, including a discussion of motivation theories. The importance of organizations' having clearly defined missions was stressed, and the use of organizational charts was reviewed. For homework assignments, the residents developed mission statements for an academic medical center and a private, community hospital. They also constructed an organizational chart for the department of pathology.

Finance and cost accounting principles were the topic for the third meeting. Break-even analysis and capital budgeting techniques were illustrated. Residents evaluated cash flows using net present value and payback period analysis. Break-even analysis was used to forecast needed volumes as part of a homework assignment.

Marketing principles were presented during session four. Market growth strategies and how they could be used by pathologists and clinical laboratories were discussed. Evaluating various clinical laboratory tests by using the product life cycle model and setting prices for laboratory tests were homework assignments.

An overview of President Clinton's national health plan proposal was presented in the final session. Job hunting tips, interviewing techniques, and types of practice arrangements were also discussed.

Training by Experience: The Role of Academic Medical Centers

Didactic lectures and seminars can provide only a portion of management training. Exposure to managers involved in the day-to-day workings of hospitals and physician practices is also important. Residents in our program are exposed to various managerial functions while rotating through specialty areas.

One important role physicians play is participant in medical staff committees. Our residents attend appropriate medical staff committee meetings. Surgical pathology residents attend tissue committee meetings and blood bank residents attend transfusion committee meetings. Surgical pathology residents attend our weekly quality assurance conference, in which cases are selected for referral to the tissue committee. Residents attend the committee meeting and are present when the case is discussed. The transfusion medicine resident works up transfusion reactions under the supervision of the transfusion service medical director and presents these reactions at the transfusion committee meeting. Our residents have gained valuable experience by attending medical staff committees. Residents in other specialties could likewise benefit from inclusion in medical staff committee functions.

Thus far, residents have been invited guests of medical staff committees. At our institution, members of medical staff committees have to be members of the medical staff. Because residents are not members of the medical staff, full membership on these committees is not possible. This is unfortunate, because senior residents could gain valuable experience and contribute to these important medical staff functions. Full membership may be possible in some institutions. In other situations, a special category of committee membership could be considered.

Another important managerial function is preparation for external inspections. Pathology residents are involved in preparations for the College of American Pathologists Laboratory Inspection Program, the American Association of Blood Banks Inspection Program, and Joint Commission for Accreditation of Healthcare Organizations inspections. Residents become actively involved in CAP inspections as members of one of several teams performing inspections. Residents also participate in AABB inspections. Residents in all specialties could benefit from exposure to JCAHO requirements. Familiarization of residents with inspections pertinent only to their specialty is also important. For example, radiology residents should become cognizant of the requirements of the Nuclear Regulatory Commission.

Exposure to the financial aspects of medical practice is critical. Residents should be exposed to the different types of reimbursement and capitation systems. In our program, residents rotating at the University of Mississippi Medical Center learn differences in reimbursement, including Medicare Type A and Type B and other third-party reimbursement peculiarities. At the VA, residents are exposed to the VA budgeting process, with emphasis on cost containment and the constraints of a capitation-based system.

Training By Experience: The Role of Private Practitioners of Medicine

Acknowledging that exclusive reliance on training within an academic medical center may not produce a well-rounded physician, some university-based pathology training programs have incorporated rotations to private, community hospitals as an integral part of the residency training experience. Physicians practicing in an academic institution face different challenges than physicians in private practice. Because most residents will eventually practice medicine in nonuniversity settings, direct exposure to fee-for-service and managed care systems seems prudent. The differences between academic and private pathology practice may be greatest in the area of laboratory management. Whereas in academic medical centers university bureaucracy may dictate several layers of management, management structure for private practitioners of pathology will vary from freestanding laboratories to hospital-based practices.

Pathologists in the private sector frequently practice anatomic pathology and oversee one or more sections of the clinical pathology laboratory. In addition to different levels of medical expertise, the managerial skills needed in a private practice environment are different from those in an academic pathology environment. By being involved in preceptorships with private practitioners, residents gain an appreciation of the types of management skills required in private practice settings. An additional benefit for the residents is networking with pathologists in private practice. This should prove valuable when they seek employment.

Comment

The residents in our pathology training program had little background in economics or management. While broad inferences should not be drawn from only one program's experience in one medical specialty, it is likely that, with the emphasis on the natural sciences at the premedical education level, most residents will receive little or no training in management principles. In spite of the fact that our residents had no previous didactic management training, they actively participated in the seminars and showed a good understanding of business principles. Exposing all residents to this material gives them the opportunity to enter their rotations with basic management knowledge upon which they can build through experience.

Rotations in academic medical centers can provide some of the hands-on training needed. However, this needs to be augmented by exposure to private practitioners of medicine. Academic medical centers may be somewhat reluctant to relinquish some of their control over resident training by allowing rotations to private facilities, but the rewards could prove substantial. Particularly because studies indicate a manpower shortage in community hospitals and because most residents enter private practice, this tactic should be seriously considered.

References

[1.] Ott, J. "Administrative Medicine." JAMA. 268(3):332-3, July 15, 1992. [2.] Dennan, H., and Dorsey, D. "The Pathology of Regulation." Clinics in Laboratory Medicine 11(3):793-802, Sept. 1991. [3.] Hanson, D., and Padget, D. "Elements of Payment for Hospital-based Pathologist Services. Clinics in Laboratory Medicine. 11(4):1055-67, Dec. 1991.

Jay P. Brooks, MD, MBA, is Chief, Pathology and Laboratory Medicine Service, Veterans Affairs Medical Center, and Assistant Professor of Pathology, University of Mississippi Medical Center, Jackson, Miss. He may be reached at 1500 E. Woodrow Dr., Jackson, MIss. 39216, 601.362-4471, Ext. 1601, FAX [phone].