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Physician opportunities in management: signs and portents.

In the 1960s, when I was studying organizational theory and the sociology of professions, it appeared that there was strong evidence that whenever professions were brought into bureaucracies, there was an attempt by members of the profession to take over control of the management of the profession. In the military, there is evidence of this in the medical service branches. Engineers in business seek dual degrees and promotion outside the technical branch of work, as do scientists in other disciplines. Dual tracks often exist, making it necessary, more often than not, for professionals in large bureaucracies to shift into management to further their economic reward path. Unions of professionals often complement this individual effort to exert control over the profession.

During the past 10 years, there has been an explosion of change that brings physicians more and more under the control of organizations. And this shift should present opportunities for physicians in management.

Trends Affecting Physician

Opportunities in Management

Shift from Not-for-Profit Institutions

to Market Equity Models

Major change is occurring in the ownership and control of physician practices, community and university hospitals, and managed care companies.(1) These changes are offering physicians an opportunity to own equity shares in community hospitals, in managed care companies, in networks, and in their own practices...once they sell out to other entities. These are not merely locally owned business opportunities; they are frequently market equity firms whose stock is traded daily on national exchanges.

As these ventures emerge, physicians in coordinating, managing, and leadership roles have substantial opportunities to gain management roles as well as ownership roles. During the period when physicians own such organizations,(2) they have great opportunities to gain stature as managers and to have substantial roles. Indeed some will not only grow in managerial and executive stature, but will also own substantial shares in the new firms, making it possible and desirable for them to retain major executive and governance roles when their firms go public and/or are sold to public firms.

Vertical Integration

No subject is hotter today than the concept of vertical integration. For many, this term means the merging or melding of physician practices and hospital organizations. Sometimes physicians acquire hospitals; sometimes this role set is reversed. There is also an element of integration with physicians building and operating managed care firms. And integration occurs when insurers and managed care firms acquire and operate physician practices within their managed care operations.

Changes in Blue Cross

and Blue Shield

Just as there are changes in the ownership and operation of hospitals and medical practices, so too are there major shifts going on in the Blue Cross and Blue Shield companies. These firms seek to recapture market share and roles from managed care firms that have done an end run on the more traditional Blues plans. They also are looking to acquire physician practices, especially primary care, and hospitals. Some are joint venturing with hospitals and physician groups.

Teaching Hospitals and

Health Science Centers

There have always been opportunities for physicians in managing, coordinating, and executive roles in and around academic institutions. A solid research and teaching career often lays the groundwork for selection into the ranks of executive leadership.

But something new is happening as vertical integration trends emerge. Distinguished institutions such as Emory University and the Medical University of South Carolina are teaming up with Columbia-HCA to form major joint ventures to own and operate hospitals and networks of primary care practices. As these hybrid organizations emerge, they will have physicians in major leadership roles. If community hospitals need medical directors, university hospitals and their faculty practice plans will expect no less and probably more.

In the examples above, the management of the physician practice groups falls to the university side of the business. One can reasonably expect Columbia-HCA to sprout some new roles for physicians in the process as well. Teaching institutions have always been fertile ground for physicians who want to move into management, but today those opportunities are expanding as other systemic changes occur.

Payment Trends

Changes in payment methodologies have made it increasingly important for hospitals to work much more closely with medical staffs. With DRGs, hospitals needed the understanding, support, and active involvement of medical staffs in bringing utilization patterns in line with reimbursement. The economic incentives for physicians have been insufficient to make this happen. Whenever hospitals need to reach out to physicians, they tend to go through the elected leadership, but they must increasingly utilize full-time medical directors to keep closer ties on a regular and full-time basis.

Medical directors and full-time chiefs have long been noted for helping to bring a degree of order and focus on quality outcomes and process in hospitals. But it has been the revolution in payment mechanisms that has brought greater pressure to have full-time physicians working closely with the medical staff. Anyone working in such roles has ample opportunities to observe, learn about, and emulate executive behaviors. Equally important, they have positions that can be used to justify participation, at institutional expense, in management development activities. This is a traditional route to larger preparation, which is itself a route to better jobs in the management arena.

Of course, physicians taking on such roles must make choices about how they approach the roles. Some wear white coats and participate in meetings with a view toward expressing the physician's view. Others try to maintain their physician perspective and keep close tabs on where physician opinion lies, but they also try to participate in management meetings as managers, with a clear eye on institutional and management objectives. No doubt, others become so much a management fixture that the original role of physician liaison is neglected. To grow and prosper in management roles means increasingly taking on the management role, building expertise in management, and becoming more and better known as an executive who also has empathy for and insight into medical needs in institutions.

Managed Care

With managed care, it has become even more important to have detailed understanding of costs and processes that drive costs. Managed care brings new management opportunities for physicians. One psychiatrist friend tells us that he has stopped practicing and now makes very good money handling the review and expert role for a managed care company. Marketing and professional relations create other opportunities. With staff model plans, becoming the CEO is a good prospect for the physician who has the political, policy, and executive skills necessary for the role. Being a physician helps here, but it is no guarantee, even in physician-owned managed care companies.

Managed care also brings new opportunity for physicians associated with hospitals. Keeping track of costs, care maps, and protocols and finding ways to improve economic and quality performance in caring for patients is high on many agendas. Physicians have an edge for jobs in this arena. There will additional opportunities in general management for physicians who seek broader roles. Excellent roles exist in large corporations that want their own internal expertise in managed care. Managed care firms and divisions need managers and probably see it as a bonus to have an executive who has both medical and management expertise. Physicians can also move up in the insurance industry.

Beyond a career in managed care, many opportunities exist for physicians with managed care expertise who want to move back into hospitals, group practices, and other more integrated organizations. Just as lawyers often take apprentice roles as prosecutors, tax enforcers, and the like, only to return to protect the fox in the hen house, so too can physicians learn and develop in the art, craft, and management of managed care and then return to more interesting and higher level roles in organizations that they have learned about from the outside.

Cost Containment

and Managed Care

As more and more employers and managed care buyers seek hard evidence of quality and cost effectiveness, increasing attention will be given to quality process management tools and techniques. Physicians with an interest and training in measurement techniques, process interaction, and engineering types of skills will have ample opportunity to play leadership roles in such teams and in departments pursuing this line of work. Of course, there will also be people trained specifically in tools and techniques who will be competitors for such jobs, but the prepared physician has added value.

Outside of those organizations directly involved in providing care and measuring their results, there are many entrepreneurial opportunities for physicians who want to supply services but not work for established organizations. Develop a new measurement tool. Develop a company that does surveys and then sells data analysis to those who need to use it. Go into the training business and teach people how to do it. Join a policing outfit, learn their tools and techniques, and then develop a consulting practice to help people and organizations routinely look good by the measures and methods being used to police the industry.

There are simply thousands of opportunities here. Some are managerial, some entrepreneurial, some policy, and many a mix of all three. In a profession increasingly policed by many outsiders, policing jobs abound.

Group Practice Development

Group practices will continue to develop and grow in size and complexity. This will mean greater opportunities for managers. Physicians have a natural opportunity to play leadership roles in such organizations, but for those who aspire to long-term leadership and management roles, there should be a continued quest for in-depth management training and experience, especially in areas of finance and health policy.

With smaller groups and primary care clusters put together on behalf of hospitals, there will be opportunities for physicians to get a taste of management roles by taking on leadership in such groups. Having a lead role in such clusters provides one with the opportunity to exercise both internal management skills and to negotiate among contiguous groups and entities.

PPOs and PHOs

Helping to build networks and joint venture operations can open up many opportunities for management roles. With an increasing trend toward vertical integration, some of these networks will become very large and complex operations within themselves. In fact, it is highly likely that some of these organizations will become giants that swallow hospitals, managed care organizations, physician practices, and insurers.

These organizations are at the intersection between physician and hospital resources. There is leverage at these intersections for physicians to use in getting a better deal for practicing physicians. And anytime it is possible to exert leverage for the benefit of large groups and institutions, the roles that dominate such organizations tend to be those from which institutional leaders are selected.

Summary of Trends

Most of the trends outlined above could be subsumed under payment changes and integration resulting from opportunities to meet the requirements of those and related trends. No doubt the list of changes could be expanded, and anyone with a fertile imagination can come up with dozens of opportunities that come from each change. But there are some downsides or counter trends to consider with these changes.

Long-Term Trend to Institutional

Ownership of Medical Practice

If current trends continue, it seem likely that most medicine will be practiced in some form of organization. Physicians will be employees and will have some major roles in the management of their colleagues.

Some physicians will have opportunities during the transition years to own equity interest in the emerging new organizations and thus play roles more akin to entrepreneurship than to institutional management. Young physicians entering practice today will never be able to develop an independent practice and thus may never have an opportunity to convert a private practice into a business that can be sold or converted to a group practice or managed care entity. Managerial opportunities will become more the norm for upward mobility for practicing physicians, but inside organizations owned by others.

Professional Managers

If our discussions with professional managers is any guide to the future, there are plenty of competitors for physicians as they seek major roles in the management of health care organizations. This is best exemplified by the comments of one executive, with a health administration degree, who said, "What do you mean we need to get more physicians into management. Those guys already have too much power, and, besides, this is our turf. We should not be giving them more."(3) Physicians seeking to break into the executive ranks need to cultivate friends and colleagues who will help with mentorship, education, and experiential learning. Not everyone will be willing, but, I hope, many will.

Independent Institutions

in Placid Times Versus

Cutthroat Competition

In the golden days of hospital administration, each chief executive officer had a board to report to and a medical staff to keep happy. Reimbursement was cost plus, and most problems could be resolved by throwing money at them. Today's job is tougher and more complex, and more and more hospitals are units of larger organizations. Today's hospitals, managed care organizations, teaching institutions, and group practices must survive in a highly competitive atmosphere with heavy emphasis on cost containment and increasing market share.

Put another way, to go into management today, one needs to be ready to like the challenge of hard choices and dealing with problems and issues created outside of areas under direct control. Even many seasoned executives are retiring because of the changes in the nature of the business. But where such changes occur, opportunities exist for those tough enough to see the challenge as exciting, not merely dangerous.

Strategies for Entry and Success

in Management

Education, Education,

and Life-Long Learning

What one does first in preparing for any profession and/or complex life endeavor is usually to seek out learning opportunities related to the knowledge and skill area that one seeks to master. For medical students, this might mean acquiring some management and public health administration expertise while attending medical school, perhaps in a joint degree program. For those already out of their formal education years, short courses can be most helpful, and. if you have a managerial role in an organization, it normally will encourage and support such efforts.

Many universities already cater to physicians seeking more extensive managerial education and have programs that meet most needs.

Seek Out a Mentor

For those already in managerial roles, it is helpful to have someone with whom you can have candid discussions about issues, problems, and opportunities. If you can find someone within the institution where you are employed to provide you with this opportunity, take it. But if there is no one or your asking for such assistance might trigger some anxiety on the person's part, seek someone from another institution or outside the health field but in management.

Some organizations have deliberate policies of requiring that each supervisor of an executive take on this mentoring task. But to ensure that this one channel for insight and assistance is not blocked or biased, they require a second mentor outside reporting channels.

A professor, a management consultant, or former board members of your or a similar organization can be sought out for assistance in this role. Another physician executive who has higher level responsibilities or works outside the institution could be helpful. Most people will be flattered to be asked to play this role, so one need not fear being turned down or disparaged for asking.

Observe, Observe, Observe

It helps to be an observer of human behavior. Most of us have ample opportunity to see what works and what does not merely by looking around and watching what people do. I had an opportunity to observe a very successful leader who has done outstanding work in leading committees and associations. Before I observed him, I had always wondered how he was so successful. I thought he might be too shy to make it work. But after seeing him over an extended number of meetings, I noticed that he listened for some time and then as he spoke up from time to time, he managed to clearly identify himself with each of the major factions on issues. When it came time for closure, he clearly articulated the main concerns against something and related that he had after some agonizing, come to a conclusion that he thought would be the better opportunity to take.

Watching anyone with a reputation of mastering the art of reaching consensus is worthwhile and usually available to anyone interested in learning. If you don't have access to such people, seek out someone who does and ask them to share their approaches with you. Having taken a lot of graduate courses over the years, I still feel that many of my most valuable learning experiences were personal contact with masters of the art of management.

Seek Variety in Work

and Learning Experiences

There are always multiple perspectives to any management issue. The more you can learn these perspectives, the more able you will become in finding solutions to the problems they present. As one of my mentors has stated often, how you feel about any issue depends on where you sit. In thinking about structuring the ideal apprenticeship rotation for young administrators just out of graduate school, I once recommended that a rotation, perhaps as long as three years, be established, which would provide one year in a large group practice, one in hospital administration, and one with Blue Cross. Today, that apprenticeship would be one year in a vertically integrated firm, one in a large teaching hospital, and one in a managed care company. The main idea is to get the perspectives of different players in the overall scheme of financing, organizing, and delivering health care.

Take Some Risks and Volunteer

Seek out opportunities to gain new and different managerial exposures. Volunteering for committees, especially chairmanships, can bring new exposures. If managed care, quality process development, liaison roles, or other such opportunities come up, take them. It is risky to do some of these things, but, in the long run, it is less risky than actually taking new jobs in areas with which you have no familiarity. Reasoned approaches to risk taking and putting out the message that you are willing to take on chores, shoulder risk, and have an interest in becoming a broader based manager are good signals to organizations looking to move people up for broader roles. If you happen to be in an organization that would be threatened by such behavior, take the risk, get the exposure, and move on to a more progressive organization.

Build Networks of Colleagues

Traveling the Executive Path

There is probably no field that relies more on networking for colleagueship, mentoring, job opportunities, and personal growth than health administration. There are association-oriented networks, book clubs, correspondence clubs, and even research and development groups that actually serve many clients even as they serve their own growth opportunities. If you don't see one readily available for you to join, create your own. I had a client once who was dying to get into one of the more exclusive clubs but simply could not. +He hired me to help him and some industrial clients create a competitive club. Within six months of this effort being developed, it was canceled. He and his industrial backers were admitted to the club he originally wanted.

Literally every group you join and use to build your knowledge and skill base has within it the opportunity for building such networks. Even those of us who are not big joiners can appreciate the value of such networks and, as I do here, recommend them to others.

Read, Write, and Participate in

Computer Network Bulletin


In the early years of hospital administration, a profession for which I have taught and researched but have not been a member, the rule was that the professional administrator ought to write at least two articles per year for publication. With the burgeoning numbers of graduates today, I doubt that this excellent advice still holds.

Time must be devoted to understanding the ideas that show up in business, health administration, economic development, and other areas of related knowledge. Reading seems to be a must.

Increasingly, computer networks may provide a vehicle to compete with the thoughtful letter, memorandum, and short article. My guess is that it will be a complement, not a replacement, for more detailed exposition.

To these items, I would add that it is also helpful to participate in other forums for idea exchange. Listening to speeches can be helpful, but working to distill and explain your ideas in a speech can be even more of a growth experience. And it produces immediate feedback.

Meet the Challenges, Claim the

Prize: Become an Outstanding


On balance, today is an exciting time for executives in health care. Every organization is undergoing major change. Some forms are dying out; others are emerging. Even those succeeding today may not survive in the next few years. There is real challenge in an industry on the threshold of such change.

In some respects, the changes we face now mirror the changes in the air transport industry and other regulated industries that have been deregulated. In other respects, health care is different. Medicine is the pre-eminent profession - independent and respected. And it is going toward an employment situation with little opportunity for solo, private practice, or even independent small groups. Airlines were always bureaucracies, but not so medicine.

At the same time, genetics and created life forms are on the threshold of transforming medical interventions. We are not seeing merely movement to outpatient care, but also the potential for truly new forms of care and intervention. At the other extreme, we see the possibility of an aging society in the next century overwhelming existing medical, care giving, and support institutions. Innovation time is here. But it is also the time of big business running medical care enterprises.

Physicians who wish to lead this revolution must become masters at management and organizational design and development. Others can do this, but none with the potential for the same depth of insight into the underlying science and practice at the heart of the health care enterprise.

All of these changes can be viewed as real challenges for managers and executives. On the science and medical practice front, physicians will supply major leadership. On the organization and delivery front, managers, many of them physicians, will play major roles.


(1.) This shift is very complex and requires more attention than can be devoted in this article. For a major debate on the subjects involved, see Health Care Management Review, Spring, Summer, and Fall Issues, 1994, where Richard Johnson and the author, along with others, discuss these changes.

(2.) A postulate of the debate I have had with Richard Johnson and others is that physicians can own and operate some of these for-profit businesses during a critical transition period from the entrepreneurial start-up phase until the firm is of sufficient size, scope, and profitability that it needs heavy capital infusion to grow and/or when physician owners want to convert their ownership interest into stock that has a ready market to allow them to cash out at will.

(3.) For several reasons, I do not identify this person. But I might add that he/she was married to a physician! I don't think being married to a physician influenced the comment, because I have found many others willing to voice such sentiments. No doubt, an experienced physician with substantial executive credentials is a major threat to many managers.
COPYRIGHT 1994 American College of Physician Executives
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Copyright 1994, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Brown, Montague
Publication:Physician Executive
Date:Dec 1, 1994
Previous Article:Physician financial relationships in the new regulatory environment.
Next Article:Health care reform: believe it or not, the ball is back in our court.

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