Ron Anderson's 22-year career at Parkland Health & Hospital System in Dallas almost ended in December 2004 when several hospital directors made it clear they wanted him out as president and chief executive officer, partly because the 735-bed public hospital was facing a $76 million deficit.
Anderson, an M.D. who completed his internal medicine residency at Parkland in 1976, not only survived the dispute but three board members who crusaded against him resigned after what some observers say was a groundswell of popular support for the CEO. Several months after new board members were appointed by the Dallas County Commission, Anderson signed a two-year contract for a base pay of $495,315.
"I was pushing for a new ($1.2 billion) hospital during a period of austerity in Texas," says Anderson, 58. "I (also) was not in favor of cutting the tax rates and spoke out about it. That is why the three board members wanted to fire me . . . but they wanted to do it under the guise of mismanagement."
In 2000, when Parkland lost $47 million from cutbacks stemming from the Balanced Budget Act of 1997, county commissioners increased property taxes. Afterward, however, commissioners decided to roll back property taxes. The tax cutbacks, just as Anderson had predicted, forced the hospital's board of managers to order huge budget cuts at Parkland in 2004 during an economic downturn.
"When you are a leader, you have to speak out for things you believe in. One board member said I was arrogant; I felt I was principled," he says.
During the yearlong dispute, support for Anderson came from former board members, employees, physicians and fellow CEOs in the Dallas hospital community. "Our charity care dropped to 47% from 55%" of total market share, he says. "The CEOs in the area wanted me to resolve this quickly. They were on my side."
And so were the readers of Modern Physician, who voted Anderson to the No. 1 spot on the magazine's first annual ranking of the 50 Most Powerful Physician Executives.
"After being CEO for 25 years, part of it may be that I lasted for so long. It may be a sympathy vote," says Anderson with a chuckle. "It is a validation that things you stand for mean something to people. You sometimes wonder: You work at a public hospital, and you don't get pats on the back from politicians you work with. It is the community accolades that are very important, particularly from peers, which is why being on this list matters a lot. I realize, however, that we are on this list because the people who work for us make it possible."
Of the top 20 physician-executives on the list, six are hospital or system CEOs, four are in government, one is a U.S. senator, six represent consumer, medical school or professional organizations and three hold top leadership positions with HMOs. The other 30 executives include 17 from consumer or physician organizations, six from hospitals, three from HMOs, three from medical groups and a U.S. senator.
"This is a wonderful example of the complexity of the healthcare networks and systems we work in," says Julie Gerberding, M.D., director of the U.S. Centers for Disease Control and Prevention, ranked No. 5. "I am taken aback," says James Mongan, M.D., president and CEO of Partners HealthCare System, Boston, ranked No. 2. "I don't feel a great sense of power on a daily basis; I take it as a compliment for the organization."
More than 10 physicians on the list also made Modern Healthcare's 2004 list of the 100 Most Powerful People in Healthcare. They include U.S. Sen. Bill Frist, M.D., (R-Tenn.), No. 3 on Modern Physician's list; Mark McClellan, M.D., CMS administrator, No. 4; Gerberding, No. 5; Molly Coye, M.D., CEO of the Health Technology Center, No. 13; and William Jessee, M.D., CEO of the Medical Group Management Association, No. 29.
Rounding out the top 10 on Modern Physician's list are William McGuire, M.D., chairman and CEO of UnitedHealth Group, No. 6; Elias Zerhouni, M.D., director, National Institutes of Health, No. 7; Sidney Wolfe, M.D., director, Public Citizen's Health Research Group, No. 8; Quentin Young, M.D., national coordinator, Physicians for a National Health Program, No. 9; and Samuel Nussbaum, M.D., chief medical officer, WellPoint, No 10.
Interestingly, Dennis O'Leary, M.D., president and CEO of the Joint Commission on the Accreditation of Healthcare Organizations, who ranked No. 13 on Modern Healthcare's list, was ranked No. 49 by his physician peers. On the other hand, Michael Maves, M.D., CEO of the American Medical Association was not on Modern Healthcare's list but made No. 19 on Modern Physician's list.
"Power is very difficult to define, and it is in the eye of the beholder," Jessee says. "Physician power often comes from being CEO of an organization whose members are increasingly recognized as a powerful group of people. Your power comes more from your ability to influence external groups like payers, government or community organizations."
Physician-executives gain power within an organization by being known as thoughtful, visionary leaders who are committed to quality improvement, says Donald Fisher, CEO of the American Medical Group Association.
"You have to be concerned about the bottom line, but the future is more about reducing medical errors and improving quality," says Fisher, who has led the AMGA for 25 years. "This is the area where physician-executives will most be judged."
Like hospital administrators who have faced financial losses, board or medical staff disputes, labor problems, medical malpractice lawsuits or government investigations, Anderson finds that power ebbs and flows.
"You are fooling yourself if you think you are powerful," Anderson says. "Sometimes you are a good leader because you followed your values well. Power is also fleeting. You can achieve it over a lifetime but lose it in a matter of minutes. When you have power, you have to use it wisely."
To practice, or not to practice
One of the more debatable criticisms leveled at Anderson was that he spent too much time practicing medicine at the hospital. Several board members claimed that took him away from critical administrative duties.
"I walk around the hospital seeing patients and teaching" residents, Anderson says. "It is absolutely an efficient way to find out what is going on. Your doctors and colleagues know, but patients can really tell you. It just takes more hours to do both."
Historically, most physician-administrators continued to practice medicine. Now, with the ranks of physician-executives swelling, some believe physicians should hang up their stethoscopes and put away their tongue depressors.
"In the '80s most physician-executives were part-time and there were very few CEOs," Fisher says. "Most practiced and did management. If you didn't show up at 2 a.m. in the ER, (other physicians) didn't think you were a physician anymore. You were still a white coat with management responsibilities. That has changed."
But the demands of clinical medicine have become more complex. Some experts believe it is more difficult for physicians to maintain knowledge and skills in both management and medicine.
"Many physicians in management don't have the time for direct patient care, but they still practice medicine by keeping up to date on all the advances of science, clinical pharmacy, medicine and technology," says Nussbaum, an endocrinologist.
Every year in two-week stints, Gerberding returns to her roots at San Francisco General Hospital to see patients and teach residents. "It adds value to my role at the CDC," she says. "You learn firsthand problems at the bedside. You are reminded how patients are affected by cancer, heart disease and AIDS, all high priorities for the CDC."
In the early part of the 20th century, most hospital administrators were physicians. That changed in the 1950s with the rise of the lay administrator and the Master of Hospital Administration degree.
Physicians, for the most part, went back to patient care and held leadership positions on medical staffs or in public health. A handful continued to run large medical groups and teaching hospitals.
The return of the physician-executive
In 1972, 11.5% of hospitals, or 813 of 7,061 hospitals, were headed by a physician, according to the American Hospital Association. But by 2002, after a wave of mergers and closures that dropped the numbers of hospitals to 6,044, only 3.3%, or 200, were led by physicians.
By 2005, physician-CEOs at hospitals have increased to 222, or 3.7% of 6,008 hospitals. In addition, membership in the American College of Physican Executives has grown to more than 14,000 from 5,700 in 1990.
"There has been a gradual re-emergence of the physician-CEO," Jessee says. "It is a reflection that healthcare requires an understanding of the product and the business of the industry. Physicians bring an understanding of what it takes to bring together hospitals and medical groups."
But modern healthcare management is much more complex than it was 50 years ago. Nursing shortages, union problems, managed care, public accountability and the myriad government regulations of today were mostly absent then.
"Back in the late 1970s there was recognition that physicians had a deficiency in knowledge and understanding of the management of institutions," Fisher says.
During this period, several professional organizations for physicians founded groups to promote physician management. For example, the AMGA created the American Academy of Medical Directors in 1975. The academy later changed its name to the ACPE.
A number of business schools also began to offer MBA programs for physicians. Medical schools have added business courses like managed care to their curriculums. The number of joint M.D./MBA programs at medical schools has increased to about 40 from 28 in 1997. Nearly 2,000 physicians have received master's degrees in medical management through ACPE programs.
During the next 10 years, Fisher says streamlined career paths for physician-executives will develop. "Some physicians after medical school could proceed right to the MBA, bypass clinical medicine and go straight into management. It is inevitable," he says.
Nussbaum, who teaches at the Washington University School of Medicine and the Olin School of Business at Washington University in St. Louis, says some medical students are pursuing dual degrees. "They want to be a senior executive at a health system, health plan or pharmaceutical company," he says.
But some hospital executives are not convinced that doctors have what it takes to manage people and large organizations. Larry Mathis, former CEO of the Methodist Hospital System in Houston, wrote a book in 2001 that took several shots at physician-executives.
"There's nothing in a physician's education and training that qualifies him to become a leader," wrote Mathis in his book, The Mathis Maxims: Lessons in Leadership. "And that's what executives are-leaders, persuaders, team builders, communicators and organizers."
Mathis wrote that medical training teaches physicians to be "an outstanding individual performer. But leadership is not an individual action. It's a participatory process." Still, Mathis conceded: "Being a physician is actually an excellent background for a person who aspires to be an executive leader, but only if they've had specific leadership training."
Many roads lead to the executive suite
Nussbaum says medical schools and residency programs are training doctors to be part of a team. "Physicians understand that highly effective communication, setting lofty goals, inspiring people to do their best, is an important part of medicine," he says.
Fisher says that truly successful integrated systems "are those with physicians at the helm." Mongan says the medical model of decisionmaking works well in management. "Almost on a daily basis we have problems and I ask for the diagnosis. . . . Once we have the diagnosis, then we look for the treatment. That kind of thinking is quite applicable to management," he says.
Like many physicians in management, Nussbaum's road to clinical management took an indirect path. After graduating from Mount Sinai School of Medicine, New York, in 1973, he became deeply interested in public health and considered pursuing that course after his internal medicine residency at Massachusetts General Hospital, Boston, in 1976.
"I became chair of a very troubled health plan, Bay State Health Care (in 1991), where I worked under adverse financial conditions and learned to be decisive," Nussbaum says. "At BJC HealthCare, I was executive vice president of system integration from 1996 to 2000 and learned how large institutions can be responsive to the public."
Jessee considered becoming a medical school dean while at the University of California School of Medicine in San Diego. He pursued that career path at the University of Maryland School of Medicine, Baltimore, for several years, but he learned that he was a good manager during his first administrative job with the U.S. Public Health Service in 1973. "One thing I found out is that no two days are the same," Jessee says. "That was different than clinical. As an administrator, you need to be open to new challenges, ideas and have a willingness to look at problems in new ways."
Mongan started at Stanford University Medical School in Palo Alto, Calif., with a joint interest in medicine and politics. He later became a staff member of the U.S. Senate Finance Committee, working on Medicare and Medicaid legislation. After working in the Carter administration as associate director of domestic policy, he was offered the job as executive director of Truman Medical Center, Kansas City, Mo., in 1981. "I never ran anything before, but Truman felt my skills-listening to people and coming up with solutions-would serve me well," he says, adding: "I had a crash course in hospital finances."
Gerberding had dreamed of being a small-town doctor since age 4. During her residency and fellowship at San Francisco General from 1981 to 1988, in the early years of the AIDS crisis, she says she developed a strong desire to work in the infectious disease and prevention area. That led her eventually to clinical administration.
"I became committed to the concept that prevention is primary and not just at the bedside because there prevention has failed," she says. "I developed (the California Primate Research Center at the University of California at Davis, from 1989 to 1993) and was successful in getting grant support and hiring people. . . . That led to an interest in the science and art of management."
Anderson also says he didn't plan to become a hospital administrator. After his residency, Anderson learned administration at Parkland in 1980 by running ambulatory care and the emergency department. In 1982, Charles Mullins, M.D., the hospital's physician-CEO, left to become vice chancellor of the University of Texas. "I didn't apply for the job," Anderson says. "They had 102 applications and I was asked to screen them." But he was offered the job and took it after receiving assurances he could teach and practice medicine.
While he was fighting hard to keep his job in 2004, Anderson says he never considered giving up. "I might have considered (taking another job) somewhere else," he says. "But the care of the community and the patient population is of paramount importance. People can fire you, but they can't take away your values, and I stayed for our employees and the community."