The tradition of the physician leader -- the mentor physician who excelled at patient care, teaching, research and administration -- is revered by every physician. The concept of the full-time medical director, which became commonplace less than 20 years ago, is loosely drawn from this tradition.
As managed-care organizations sought to reduce utilization, they found no better way than having one physician talk to, and sometimes brutalize, another. With the advent of the medical director, power over clinical decisions shifted from the provider to the HMO. Despite this level of influence, many medical directors did not feel like leaders: Physicians complained about denial of payment and health plan officials complained about high medical losses.
Initially, medical directors were a great investment for health plans -- more than 10 dollars was saved for each dollar spent on medical directors.
Now, however, the hassles that such processes create eat up productive hours that physicians could devote to the care of patients and force delays in treatment. To avoid approval squabbles, physicians have stopped asking for admissions and procedures, even many that they know would be approved.
As health plans shift more risk to providers, they find it hard to justify the high cost of medical directors to stock analysts (the "utilization review" of the equities industry). Many managed-care organizations are trying to automate medical management with sophisticated demand management and clinical algorithms.
And a growing number of medical directors are now wondering if they are obsolete.
Ironically, the twilight of the health plan medical director has coincided with the dawning of the physician executive in the delivery system.
Indeed, many managed-care medical directors are being sought by healthcare providers. (Even the American Academy of Medical Directors changed its name to the American College of Physician Executives). These same medical directors are at the vanguard of the movement to return medical management to providers of care.
Buoyed by the sense of independence and control (and maybe financial success) brought on by the prospect of risk-bearing, delivery systems are looking for a way to get physicians to practice efficiently and, at the same time, be loyal to the system. More broadly, as delivery systems work to differentiate themselves in ways other than price, physician executives are assuming a stronger role in the overall management of the delivery system, calling on skills that go far beyond medical management.
Historically, management of the delivery system has been overseen by nonclinicians, with physicians in supporting roles. When clinical decisionmaking is the primary determinant of competitive survival, however, it is physician executives who have the skills needed to manage an organization. They can decentralize much decisionmaking to practicing physicians and engage in a collaborative dialogue that promotes loyalty to the delivery system.
Physician executives encounter few of the problems experienced by traditional managers in organizational governance, such as a perceived resistance from physicians, the lack of authority to mandate action and the conflict between physicians and management. These tensions are eased for physician executives because they have credibility with their peers by virtue of their clinical experience and, therefore, are likely to have the influence necessary to initiate a significant change in practice patterns.
By addressing the concerns of the staff but maintaining an overall view of the enterprise, physician executives can dramatically improve the quality and efficiency of clinical practice. Because physicians are not known for accepting oversight by nonphysicians, physician executives provide a powerful means of creating sustainable change in integrated delivery systems and of placing physicians in the position to lead others in making change. The physician executive with good management training not only can understand the importance of these issues -- often from personal experience in practice -- but also can incorporate these views into the culture and operations of the delivery system.
Everyone on the provider side is affected by this change. Competitive advantage -- that consolation prize for not having a monopoly -- used to be gained through good billing and low management costs. Chief financial officers and other green-eyeshaded people wielded great power because they sent out the bills and kept the books. Now that everyone has lowered unit costs and accepted financial risk for care, the next area of scrutiny lies in the way tests and therapies are used. All eyes have shifted to the clinical process and have heralded "care management" as the basis for competitive differentiation and success in the future.
This activity is the springboard for the physician executive in the delivery system. Health systems are scrambling to hire or designate their "Chief Medical Officer," and even are giving him influence and staff.
Physician executives can do many things to enhance their management skills and prepare themselves to become a chief medical officer.
They need to expand their mastery beyond the medical-management aspect of the delivery system to such areas as finance, operations, legal affairs and marketing. This is as important as knowing how to deal with physicians in practice and how to supervise clinical decisionmaking.
They must earn credibility with traditional lay executives. While some lay executives may flatly reject physicians as leaders without regard for their abilities, many observe that physician executives are unrealistic and naive about nonclinical affairs. To learn healthcare delivery management, physicians must obtain substantial classroom and field experiences in settings where mistakes can be made without dire consequences. A progressive career path will include up-to-date case studies, management training with a focus on delivery systems and, most important, a mentoring program .
They must learn reason-based judgment skills. In their core development, physicians learn to avoid risk and ignore resource constraints. This does not train physician executives well, because managing risk and managing constrained resources define the essence of senior managerial decisionmaking.
They must maintain credibility with physicians. It is no surprise that most physician executives are board-certified and spent some time in practice, as these experiences shape their ability to bring the physician's perspective to managerial decisions.
Among the most important tasks the chief medical officer must accomplish are improving clinical performance and getting doctors involved in process change, developing system loyalty among physicians, creating an organization for clinical efficiency among nonphysicians and maintaining the respect of other executives.
The emergence of the chief medical officer is symbolic of the change in the role of the physician executive and has great potential to change all physician executives from "managers of physicians" to "physician managers" and to move all physicians toward a brighter future. Every delivery system should work aggressively to institute, empower and support a chief medical officer and other physician executives.
Maybe, if we are successful, we will cultivate some new physician leaders in our lifetimes.
Brailer, who holds an M.D. and Ph.D., is associate professor of medicine at the University of Pennsylvania's school of medicine and adjunct assistant professor of healthcare management at the Wharton School of Business.