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Physician and nonphysician managers as decision makers: are the differences justified or just an illusion?

In the past 10 years, there has been an increasing trend for physicians to join the ranks of health care administration. Consequently, they have become more involved in financial, competitive, and strategic decisions in health care delivery systems, in conjunction with, or in place of, decisions on delivery and quality of care. Alexander and Morrisey suggest that 70 percent of all the expenditures on health care are directly influenced by physicians.(2) If physicians currently control 70 percent of the health care dollar, will an increase in physician executives increase control to 80 percent, 90 percent, or even more?

There are those who view health care management decisions as involving the same process used in all businesses. Others argue that health care is significantly different from other business, requiting management with special skills and knowledge. Physicians have the potential for becoming effective managers. They are intelligent and motivated and have been exposed to complex thinking and comprehensive learning skills. Despite these attributes, physicians do not receive management training in medical schools or in their postgraduate residency training. Even as physicians are increasing their business education and assuming managerial roles, the literature has only described the skills physicians need to develop. It has not addressed the ability of physicians to adapt clinical decision making skills to those necessary in a business context.

Theoretical Background

The purpose of the study reported in this article was to investigate physician and nonphysician managers' strategic decision making process and styles to see if they are different. Meyer(2) suggests that decision making "metaphors" can contribute to understanding of health care decision making and are based on the cognitive limitations of individuals in a management capacity. These metaphors, or decision models, are evaluated on the basis of four theoretical concept.

Clinical Model--decision making that venerates the role of clinical judgment in diagnosing patients. Benefits anticipated for individual patients constitute the most salient decision criteria.

Fiscal Model--decision making in this metaphor seeks to maximize an organization's well-being by allocating resources to those investments that promise the highest returns.

Political Model--competition for scarce resources generates an awareness of organizational politics and political behavior that creates coalitions, bargaining positions, and political negotiations to attain specific goals.

Strategic Model--this decision model is conceptualized as strategic planning exercises that can glean explicit strategies from predictions of competitors' behavior and demographic trends and from intuitive ability.


A survey was designed that required the respondents to read a case study presenting a strategic decision to make a major capital expenditure to purchase medical diagnostic equipment. The case was developed to ensure that all four decision making metaphors would be apparent and equally represented in the context of the case study. Expert opinion was employed to design the survey. Thirty managers were asked to participate in a reliability test after the survey was developed to ensure the appropriateness of the metaphoric measures.


The questionnaire was mailed to 1,000 randomly selected members of the Medical Group Management Association (MGMA) and to 300 members of the American College of Physician Executives (ACPE). There were 267 MGMA members and 156 ACPE members in the study responses. There was a wide range of backgrounds, qualifications, and management experience in both samples.


Initially, it was believed that physician and nonphysician managers were different in the way they approach and make strategic decisions. In formulating a problem in the decision process, an individual's characteristics, including skills and experience, are a major factor in determining decision process and style. In the interest of cognitive economy, we tend to develop belief structures that simplify representations of our complex world. These belief structures are based on the simple exposure effect of time spent in a particular department or function. Therefore, it was believed that physicians would tend to be more clinical in their approach to decision making and nonphysician managers would be more financial and strategic.

The study shows that physician and nonphysician managers do tend to make decisions differently in some respects and similarly in others. In comparisons of the mean responses of physician and nonphysician managers, significant differences were found in two areas (figure 1, below). Physicians tend to be more political in their approach to making strategic decisions; nonphysician managers show a greater likelihood of making a strategic decision in the fiscal model.

Physicians have great power and authority over their clinical decisions. However, in most health care organizations, there is a bureaucratic hierarchy of defined authority for decision making. To adapt to structural constraints, physicians tend to use political skills to achieve their goals and objectives. The ability to influence others through the use of political power becomes valuable. Those physicians who have developed and used political skills in their clinical careers tend to transfer the skills to their managerial careers.

Nonphysician managers will likely face the fiscal constraints of the budgeting process. Throughout their career, they have gained more responsibility and experience in the financial realm of decision making. In contrast, physicians have been shielded from the realities of financial decision making.

The results of the analysis also revealed that, when the various decision making styles were rank ordered in terms of likelihood of using that style, the two sets of managers disclosed similar tendencies (figure 2, fight). The primary style of choice in making the strategic decision presented in the case was the fiscal model, followed by political, then strategic, and finally clinical. The similarity in rank of decision style between physician and nonphysician managers indicates that physicians can adapt to the decision making style, constrained by the situation--in this case, a strategic decision with financial considerations. The least likelihood for both groups was clinical. Because clinical decisions generally involve short periods, in contrast with the long-term perspective of strategic decisions, it would be reasonable to hypothesize that a clinical decision making style would be inappropriate. The results of the study may indicate that physician managers are able to identify correctly an appropriate decision style for a strategic decision.

The outcome of the study posed some controversial issues in relation to the proposition of the benefits of using physicians as managers. There has been a basic assumption that the integration of physicians into health care management and decision making roles will lead to greater operating efficiencies. Yet there have been numerous studies that reveal that, as physicians become more involved in health care management, the cost of health care increases. Studies also reveal that the quality of care may increase with physician participation in management, but at the expense of higher costs of delivering that care. Physician integration into management tends to create tension between clinicians and administration, as practicing physicians become confused and disillusioned about which side the physician executive is really on, medicine or administration.

Physicians are facing a rapidly changing health care system that is not conducive to physician participation and control. The turbulent environment has changed the structure of physician practice from small scale individualistic to large scale bureaucratic organizations of physician groups. HMOs and managed care have created more control mechanisms placed on physicians and the practice of medicine. The rise of corporate forms of health care organizations has created concerns that physicians will lose their autonomy to corporate decision makers. Physicians also believe their involvement in controlling health care costs is a better alternative to heavy-handed regulation. But there is also a surplus of physicians, increasing the need for physicians to look outside clinical care for employment and salaries comparable to those in clinical practice. Physician executives hope to ease tensions between administration and medical staff, to supervise quality of care, and to regain control of the health care system that was once their domain.

The current crisis in the cost of health care will require physician executives to develop a populationbased public health perspective, rather than the narrowly defined individual doctor-patient perspective of the past. Those physicians who develop this perspective will become effective managers. Those physicians who cannot balance the two different and conflicting perspectives, and who expect the entire system to adapt to their individual clinical needs and interests, may contribute to the demise of the health care system as we know it.


1. Alexander, J., and Morrisey, M. "HospitalPhysician Integration and Hospital Costs. Inquiry 25(3):388-401, Fall 1988.

2. Meyer, A. "Mingling Decision Making Metaphors." Academy of Management Review 9(1):6-17, Jan. 1984.


Alexander, J., and others. "Effects of Competition, Regulation and Corporatization, on Hospital-Physician Relationships." Journal of Health and Social Behavior 27(3):220-35, Sept. 1986.

Betson, C., and Pedroja, A. "Physician Managers: A Description of Their Jobs in Hospitals." Hospital and Health Services Administration 34(3):353-69, Fall 1989.

Eisenberg, J., and Williams, S. "Cost Containment and Changing Physician Practice Behavior." JAMA 246(19):2195-201, Nov. 13, 1981.

Hillman, A., and others. "Managing the Medical Industrial Complex." New England Journal of Medicine 315(8):511-3, Aug. 21, 1986.

Shortell, S., and LoGerlo, J. "Hospital Medical Staff Organization and Quality of Care." Medical Care 19(10):1041-55, Oct. 1981.

Sloan, F., and Becher, E. "internal Organization of Hospitals and Hospital Costs." Inquiry 18(3):224-39, Fall 1981.

Taylor, R. "Perceptions of Problem Constraints." Management Science 22(1):22-9, Sept. 1975.

Wallace, C. "Physicians Leaving Their Practice for Hospital Jobs." Modern Healthcare 17( 10):40-1,44,48,55-6, May 8, 1987.

The authors gratefully acknowledge research support from the American College of Physician Executives and the Medical Group Management Association. We are indebted to Paul Nystrom, PhD, for his assistance in designing the study and interpreting the results and for the many hours of moral support he provided. We gratefully acknowledge Mike Wilson, Ron Baer, Otto Cox, and John Casanova, MD, for their support in initially designing the survey instrument. We are appreciative of all the physician and nonphysician managers who selflessly took time out of their busy|schedules to participate in our study.
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Title Annotation:Management Style
Author:Schroeder, Norman, II
Publication:Physician Executive
Date:Sep 1, 1992
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