Rise in physician MBA programs creates opportunities, challenges for business schools

Like the vast majority of healthcare professionals, 
Dr. Rocky Singh, chief medical officer at Indiana University Health West Hospital in Avon, began his medical career with a singular focus: to provide the best care for his patients.

But Singh, trained as an emergency medicine specialist, quickly learned that medical school had not given him the financial know-how to navigate the delivery system.

“When you're talking with your CEO about getting a new piece of equipment, you need to justify that when his question is, 'What's the ROI on this?' ” Singh said. While physicians can likely make a strong clinical case for such an investment, many might struggle explaining how it benefits the business.

The need to better understand the business aspects of healthcare became clear in 2002 after Singh became a site medical director for the emergency department at IU Health Morgan in Martinsville, Ind.

The experience forced Singh to ask questions he had not thought about when he worked solely as a clinician. He had to bone up on critical business metrics, including understanding the hospital's service area, patient volume, and the cost of supplies and labor, to name a few.

“That's when I realized that my knowledge and skill in finance, accounting, microeconomics and what's happening on a macro level were rudimentary at best,” Singh said.

In 2013, Singh decided to get an MBA. At the time, many of the schools he considered had programs geared more toward other professions and not healthcare. None, he said, took into account the many changes that were reshaping the healthcare industry as implementation of the Affordable Care Act was underway.

In the end, Singh picked Indiana University's Kelley School of Business. The decision was due to the school's ties to the university medical school, which for 20 years had been running development programs to teach basic business acumen to academic medicine faculty members.

That same year, the business school launched its Business of Medicine Physician MBA program, intended to teach clinicians.

But the two-year program also includes curriculum that aims to improve operations across the delivery system. Students can learn how to cut down on patient wait times while adding efficiencies designed to improve care quality and outcomes.

“We started an MBA program for physicians because we saw the need out there,” said Susannah Gawor, director of IU's graduate business programs in medicine. “The change that really needs to happen in healthcare needs to happen from more physician leadership.”

Kyle Anderson, a clinical assistant professor of business economics at IU's Kelley School of Business, teaches a course to physicians during a Physician MBA residency session in Indianapolis.

Indiana University is one of dozens of business schools throughout the country that have created healthcare-
specific MBA programs over the past decade. Like IU, many schools have adapted their programs to meet the continuous changes within the industry to stay relevant for students.

Many have responded to the even closer relationship between business and medicine by offering programs that allow students to earn an M.D. and MBA at the beginning of their careers.

“I think a lot of people over the last decade have probably been graduating saying that they're interested in helping people, yet they understand there are a whole lot of aspects about the business of healthcare they'll need to understand in addition to the medical aspects,” said Dan McCleary, assistant dean of admissions for Duke University's Fuqua School of Business.

The evidence can be seen in the growth of the programs. The number of schools offering joint M.D./MBA degree programs has increased from approximately six in 1993 to about 65 today, according to the Association of MD/MBA Programs.

That growth has led to greater competition among schools to recruit students.

“In the old days, there were probably fewer than 10 programs that I could have discussed with any candidate for them to consider,” said Kim Kuerten, executive director of graduate executive programs at Auburn University's Raymond J. Harbert College of Business. “Today, they have lots of options.”

According to Dr. Karen Meador, senior physician executive in the Center for Healthcare Excellence & Innovation at consulting firm BDO, the concept of an MBA program tailored for healthcare professionals began as early as the 1960s.

One of the first started in 1967, when the University of Pennsylvania's Wharton School launched the Leonard Davis Institute of Health Economics, which included a healthcare cohort within its business program. The institute eventually led to the creation of the school's healthcare management program in which students can earn a dual M.D./MBA degree.

The program is operated in collaboration with University of Pennsylvania's Perelman School of Medicine.

“It gives them a mastery of both medicine and money,” said Meador, who graduated from the Wharton School with an MBA in 2002. “Often, physicians have had a reputation of not being very savvy with financial matters; the education gained in an MBA program can be very valuable both professionally and personally.”

Auburn's Kuerten said one of biggest ways her school's Physician Executive MBA program has evolved over the past decade has been how the curriculum has expanded to address current marketplace issues such as the ACA, physician reimbursement, electronic health records and medical homes.

A big area of focus for Auburn's curriculum as of late has been quality—understanding care metrics and their relationship to the success or failure of the business. Kuerten said a large number of program alumni have become chief quality officers for health systems.

Many of the students who seek an MBA go on to become hospital administrators.

But Kuerten contended most degree seekers early on did so to better understand the language of business to help them run their own independent practices, or to start their own businesses.

These days she said more physicians coming into the program are hospital employees, some of whom seek a better understanding of healthcare business just to deal with the current environment.

“One of our doctors said it best, 'Just being a good doctor is no longer good enough. You have to define it, quantify it, measure it, document it, improve it and show it to patients, payers and the government.' ”

Duke's McCleary said a big challenge for faculty is staying current in an industry as complex and enormous as healthcare. He said figuring out what subjects are most important and deciding how much time to devote to those subjects remains a daunting task.

“We find that a lot of physicians really value getting the finance and accounting skills,” McCleary said. “Those sorts of things really add a lot of value to their ability to conduct the nonclinical parts of their job.”

BDO's Meador said a crucial component for any healthcare-specific MBA program was having faculty members who remain engaged in the practice and leadership of medicine so they can give students a more real-world view of how current industry challenges—whether reimbursement, quality or policy—are actually being addressed.

“I often think the programs that are combined with medical schools can get the best of both worlds,” Meador said.

From a recruiting standpoint, Singh acknowledged he tends to hold doctors with MBAs in higher regard when making hiring decisions. He sees potential leadership opportunities for those with business acumen, placing them in a strong position to succeed executives when they retire, leave or are replaced.

And that perspective at the leadership level brings financial and quality benefits. A 2011 study published in the journal Social Science & Medicine found hospitals that were led by physicians had 25% higher quality scores than hospitals run by executives without medical training.

Yet clinicians remain largely underrepresented in 
hospital governance. A 2016 analysis published in the Journal of Hospital & Medical Management found clinicians generally represent less than 20% of hospital board membership.

“With the added education, the skills these physicians are showing can go a long way in ensuring we have the right people in the right spots,” Singh said.