One of the side effects of managed care is physicians choosing to migrate away from practice and into management.
Conservative estimates indicate 16,000 physicians in the U.S. claim administration as their primary specialty, according to the American Medical Association. The American College of Physician Executives, a Tampa, Fla.-based organization geared exclusively to doctors in management, has about 14,000 physician members; approximately 5% have master of business administration degrees.
It's not surprising that business-trained physicians are swelling the ranks of healthcare management. A common theme among physician executives is the desire to influence healthcare policy from the inside. In the past, physicians frequently drifted into management by default or to escape clinical practice.
Given the extensive skills required of medical managers, and the need to compete at a high level, many physicians are looking to supplement their medical training with business school or less intensive courses of study.
For those who go the full nine yards, several questions remain. Does an MBA offer a physician a competitive advantage in the marketplace, and does a business curriculum add real value to the competency a doctor gains through experience?
For me, the clearest path to achieving management skills was business school. In 1994 I enrolled in an executive MBA program, a 21-month course of study with classes on alternating Fridays and Saturdays. In my current position as medical director of a managed-care organization, I apply many of the skills I acquired in business school in routine activities that require leadership, teamwork, computer know-how and operations management.
My business skills also are an asset in performing more clinical functions, such as utilization and quality management, provider profiling and accreditation, policy development and implementation, and market analysis and network development.
Before I entered business school, I had never heard terms like "economies of scale," "loose bricks" and "first mover advantage." The ability to understand and discuss business concepts is essential for success in today's volatile practice environment. I have found this to be especially true because my time is divided equally between physicians and nonphysicians.
The inextricable link between medicine and business occurs at the crossroads of ethics. In my position, rarely a week goes by in which I don't face some ethical issue. Business school -- where I took my first course in ethics -- gave me more insight into managing such dilemmas.
Kenneth Veit, D.O., dean of the Philadelphia College of Osteopathic Medicine and a graduate of Temple University School of Business and Management, believes an MBA adds value even for someone in his position. "It provides a set of skills that is rarely directly applicable but at the same time is constantly being used indirectly in various formats," he says.
Other physician executives find their MBAs just as valuable. In a recent survey conducted by Mary Frances Lyons, M.D., senior consultant for Oak Brook, Ill.-based Witt/Kieffer, Ford, Hadelman & Lloyd, 89% of 30 physicians with business degrees said their MBAs had a positive impact on their careers. All but one said if they had it to do over again, they would seek an MBA.
A business education can help managers master more quickly the strategic skills considered essential for personal and professional success, says Ronald Yeaple, executive professor at the William E. Simon Graduate School of Business Administration at the University of Rochester. For example, Yeaple says, business school can help executives acquire industry-specific knowledge, develop analytical abilities and computer competence, learn to manage innovation and create effective alliances.
Moreover, compared with pay levels of individuals with only a bachelor's degree, investment in an MBA begins paying off early in one's career. Yeaple's research found programs with the best academic reputations tend to be those offering the highest financial returns.
Other efforts to illustrate the value added by an MBA degree also point to better salaries.
A study published in the New England Journal of Medicine in 1994 determined the return on educational investment over a working lifetime for five groups of professionals. Specialist physicians and attorneys benefited the most, primary-care doctors had the poorest returns, and dentists and businesspeople had intermediate gains. The study did not examine individuals with dual degrees.
A 1997 physician executive compensation survey conducted by Cejka & Co. evaluated the income of physicians who had additional postgraduate degrees.
While physician executives without a postgraduate business management degree enjoyed a healthy median compensation of $190,000, those with an MBA fared better, averaging $200,000.
Another measure of value is the extent to which physician executives contribute to their organization's effectiveness and performance. Nancy Cross Dunham and colleagues at the University of Wisconsin-Madison School of Medicine queried physician and nonphysician executives regarding certain organizational objectives, such as improving quality assurance activities, establishing effective relations with medical staff and evaluating practice patterns for efficiency. Several interesting findings emerged.
First, all executives place a high value on achieving organizational objectives. Second, in areas where there are significant differences in their contributions, nonphysician executives always rated physician executives' role higher than the physician executives did. Third, physician executives need to expand their skills in areas such as technology assessment, information systems, and cost-benefit and other types of quantitative analyses. An MBA appears to work best for people looking to develop these kinds of technical skills.
In fact, Alan Hillman, M.D., and associates at the University of Pennsylvania Health System have identified eight areas of knowledge considered prerequisites for effective medical management:
No matter how much value an MBA adds, however, organizations still rely on chemistry in making their executive selections.
Lazarus is medical director of behavioral health medicine for Prudential HealthCare in Horsham, Pa., and author of MD/MBA: Physicians on the New Frontier of Medical Management (American College of Physician Executives)