Making the Grade

Physician MBA Program Creates Medical Entrepreneurs and Physician Executives

Making the Grade
Physician MBA Program Creates Medical Entrepreneurs and Physician Executives

By Kelly M. Pyrek

“With great power comes great responsibility.” That may be a line from a popular movie about a comic book superhero, but it holds true for physicians who are poised to cross the line from clinician to executive or entrepreneur. While doctors obey the Hippocratic Oath to do no harm to their patients, there is no such solemn affirmation when entering the business world in a medical managerial capacity.

As an increasing number of physicians explore new opportunities in health management organizations, integrated health systems, urgent care centers, physician group practices, ambulatory surgery centers, and other healthcare facilities, they must possess the abilities that are critical in executive roles.

Lois Lister, senior vice president and managing principal of the executive search division of Cejka Search, describes the aptitudes common among physicians: critical thinking skills, thoroughness, the ability to solve complex problems, strong motivation to be successful, and in many cases, the ability to work well with other physicians.1 Lister notes, however, “Medical training and clinical practice do not encourage development of all characteristics and habits that executives must have to succeed and advance into top-level positions.”1

The challenge is that the vast majority of the more than 650,000 practicing physicians in the United States today have received little or no formal training in business administration. They have practiced medicine in a fee-for-service environment that has not required them to be aware of how the marketplace works and how a healthcare institution or practice must be run from a financial perspective. While they are clinical veterans, they are business novices in dire need of a new skill set that will help them navigate the choppy waters of post-managed care healthcare.

Enter the physician MBA program. Although some physicians may have earned their master’s of business administration (MBA) degree through a traditional program, there are now MBA programs tailored specifically for physicians to prepare them for increasingly complex processes, systems and trends in the healthcare industry, including new reimbursement structures, increased public reporting, advanced quality improvement initiatives, and the nuts and bolts of day-to-day operations where clinical and business imperatives intersect in a healthcare facility. It’s a strategic mindset that isn’t part of the medical indoctrination but is essential to success in the fast-paced business world.

“Physician leaders must be equipped with the knowledge and the skill sets they need so they can lead effectively and improve patient outcomes,” emphasizes Michael J. Stahl, PhD, professor of business and director of the Physician Executive MBA Program (PEMBA) at the University of Tennessee (UT). Stahl explains that PEMBA is an advanced educational degree offered exclusively to physicians seeking high-quality leadership, management and business operation skills. Going on its 10th year of operation, the program recognizes the shifting role of physicians from that of primary caregivers to that of business leaders in an evolving healthcare industry. According to Stahl, while medical schools teach the skills necessary to practice medicine, they do not necessarily prepare physicians to be effective business leaders. Physicians who enroll in a MBA program make a conscious decision to become proactive leaders in the modern healthcare industry rather than accept the status quo. In order to become effective leaders, physicians must have working knowledge of their own skills and abilities.

Stahl says that when the program was being developed, the university took into consideration the myriad changes healthcare was experiencing and incorporated these elements into the program’s curriculum for real-world instruction. “We knew there would continue to be dramatic changes in healthcare,” Stahl says. “Turning the clock back 10 years, managed care organizations were big at the time. And healthcare was starting to experience numerous impacts such as baby boomers who are voracious healthcare consumers; there have been issues relating to access to healthcare and the government getting more involved, including an increasing percentage of healthcare expenditures coming through federal or state means; and we can’t ignore the growth of the Internet, which allows patients to become better informed as they enter the healthcare system. We’ve also seen in that time the introduction and growth of electronic medical records to reduce error rates, as well as a focus on improved quality of healthcare, and that’s just skimming the issues.”

Stahl explains that these industry changes necessitated a program that could make sense of the trends and incorporate that knowledge into high levels of business functionality. “It was our hypothesis that physicians needed to acquire knowledge about the business side of healthcare enterprises so they could do what they wanted back in medical school when they took the Hippocratic Oath – improve the lives of their patients, particularly if they were in a leadership role. It didn’t matter if they were running an ASC, the outpatient division of a hospital, an imaging center, or an urgent care center; they needed to understand these issues if they were going to lead as an executive and improve patient outcomes.”

While some physicians may recoil at the thought of trading their white coat for a business suit, the thought intrigues others, like Edward Millermaier, MD, a 2006 graduate of the University of Tennessee program. Millermaier followed a typical path when he decided to pursue a career in medicine. After earning an undergraduate degree at the University of Wisconsin-Madison, he finished his medical education in 1984 at the Medical College of Wisconsin. A family practice internship at Cleveland Metro General Hospital was followed by an internal medicine residency and then a chief residency year at Mount Sinai Medical Center in Cleveland, where he was the recipient of the Stanley Shensa teaching award. His first five years post-training were spent in the National Health Service Corps at People’s Health Center in Indianapolis. After spending two years in an emergency services practice, he and his family moved to Kalamazoo, Mich., where he practiced as a general internist for 10 years.

And that’s when things got interesting. Millermaier suddenly found himself taking on increasing administrative responsibilities at Borgess Health Alliance in Kalamazoo over the last six years. In 1999, he began as the medical advisor for managed care for the provider network, and in late 2000 he became the medical director for ProMed Healthcare, the physician practice division of the health alliance. In that role, Millermaier demonstrated his talent for innovation when he created shared medical appointments, successfully engaged ProMed in pay-for-performance programs, and focused his attention on quality and compliance.

Millermaier is now the chief medical officer and chief operating officer for the ambulatory care division of Borgess Health Alliance. Created in October 2005, the division includes nine practices in 15 sites, outpatient physical and occupational therapy, corporate medicine, an immediate medical center, the Borgess Health and Fitness Center, and the outpatient lab and radiology services for Borgess Health Alliance. Millermaier’s division employs 600, engages 100 providers and generates more than $65 million in revenue.

Recognizing that executive-level work requires commensurate education, Millermaier knew he needed PEMBA to help prepare him for the rigors of his executive capacity. “My career objectives were to understand the business of medicine and apply that understanding to my work because I had just been hired to lead the ambulatory care division for Borgess Health,” Millermaier explains. “While I was comfortable and familiar with the quality side and had managed that for several years, the business side was always someone else’s ultimate responsibility. That changed with my new position. Now, everything in scope for Borgess Ambulatory Care rolls up to me. PEMBA gave me the foundation needed to meet the challenge and responsibility associated with the position.”

Millermaier adds, “There are many necessary skills required to get beyond simply ‘surviving’ in medical business leadership. Of course, understanding basic financial statements and reports is important. Any business education includes this. I think we physicians are comfortable with numbers so finance is likely easier for us to grasp, but we also need to understand the legal and statistical issues associated with medical management. These are survival tactics and are part of the PEMBA experience. What I needed was leadership development and insights into management of people. The University of Tennessee PEMBA program devotes a significant amount of time to these areas. They are not emphasized in medical education, yet they are expectations placed upon physicians in leadership positions.” Millermaier adds that although effective communication is a hallmark of a satisfying physician/patient encounter, medical school doesn’t prepare physicians for more formal encounters requiring additional poise and presence. “An additional skill I continue to work on is in presentation to large and important groups. As physicians, we are not trained to do business level presentations to boards of directors or members of the business-community, but I am expected to do this in my job and PEMBA emphasized this skill to us.”

Not every physician is cut out to be an executive, and rightly so, says Stahl. “There are many very fine physicians who all their lives have been training in medicine only and pride themselves on their clinical expertise. That’s fine, as we do not tell physicians to stop practicing medicine and pursue a leadership role. Instead, we are interested in recruiting physicians with experience in a clinical role who either are in a leadership role currently or who aspire to be in one.”

Being a self-starter is not only a vital characteristic for being a physician, it is critical as a business executive, and it is an attribute the University of Tennessee is looking for when it evaluates applicants as prospective students. “I do believe our program is designed for those individuals who are inner-directed,” Stahl says. “We tend to attract physicians who are self-starters and people who can envision the future – they are the ones who excel in this program.

To say that UT is selective about the physicians who are admitted to the program goes to the heart of the intention of the curriculum – to provide intensive training to individuals in healthcare leadership roles who are serious about meeting the needs of patients while balancing the needs of stockholders. For many physicians, tackling healthcare economics will be the toughest problem they face in their careers.

“Look at how surgical services are being challenged yet reimbursements are going down,” Stahl observes. “People talk about cutting costs, but unless you are totally imbued with process improvement and lean thinking, sometimes the product can suffer. While I wouldn’t want to call a patient a “product,” a non-physician approaches budgets with the notion of how to save an extra dime and doesn’t think in terms of the quality of the care delivered to the patient. And if that person doesn’t think in terms of the concept of lean healthcare, which focuses on improving patient outcomes, the patient could suffer. In fact, the dimension of lean healthcare as a part of physician leadership and quality improvement has been so strong we recently started a non-degree, one-week course called the Lean Healthcare Institute. We are seeing a number of physicians who may not be ready to commit to a year of study to get an MBA, but they know that for today at least, they need to know more about lean concepts. Focusing on quality improvement is consistent with this MBA program and part of our intellectual heritage for 20 years.”

Millermaier acknowledges that lean thinking has become a part of his undertakings as a physician executive. “One of the most significant enhancements PEMBA brought me was in understanding how lean thinking, especially lean processes and philosophy as developed in manufacturing, are relevant to healthcare. Applying manufacturing concepts to healthcare sounds very out of place for many of my colleagues. However, lean principles actually work quite well in healthcare. We are actively applying these principles (in partnership with two of the major payors in Michigan) to our ambulatory enterprise in both the physician office setting and in the patient financial services office, integrating the revenue cycle with providers to reduce re-work and eliminate non-value added time to patients and providers.” Millermaier adds, “Sound business practices are even more appropriate in the ambulatory arena where margins are not as great and competition can be intense. Without a good business model that is well executed, the ambulatory-based patient will ‘ambulate’ to the alternative very quickly.”

Many physicians suffering from low morale or burnout on the job consider business school as a way to escape the clinical grind, but it’s not always a panacea. Stahl says students in the PEMBA program must be prepared to drill down to the reasons they are pursuing an advanced level of training.

Stahl says he sees two different sets of motivations among PEMBA participants. “One set is very proactive set, a physician like Dr. John Hajjar who had this notion of how he could improve the quality of healthcare delivery with stand-alone ambulatory surgery centers.” Hajjar, a 1999 PEMBA graduate, is presently the CEO of Urology Specialty Care and Surgicare Surgical Associates. A 1981 graduate of Georgetown University School of Medicine, Hajjar trained for two years in general surgery and four years in urology at NYU Medical Center, and started his solo practice in 1987, subsequently opening his ambulatory multi-specialty surgical facility in 1992.

“Dr. Hajjar came to PEMBA knowing he had already launched an ASC but needed further knowledge and skill sets to hone his business model, improve his processes and then to grow the facility,” Stahl adds. “We’ve had physicians come to UT because they had an idea they wanted to build on but knew they didn’t have all of the knowledge they needed to do so successfully.”

Stahl says the second set of motivations is more reactive in nature. “It’s the physician who has practiced for a substantial amount of time or been in a leadership role for a while, but is fed up with being beaten up by rules and regs, by insurance companies, by malpractice attorneys who are suing them. They are frustrated by not being able to practice healthcare as they aspired to while in medical school. They don’t like the fact that managed care tells them they cannot authorize treatment for a patient because it’s too expensive in the opinion of a non-physician person.”

“We also see a fair number of physicians who want to do something different,” Stahl adds. “Perhaps they are at a mid-point in their career, having worked in a clinical capacity for a couple of decades and now they want to try their hand at leadership. In either scenario, PEMBA was developed for a unique student -- the current or future physician executive. We based our curriculum on extensive research into what physicians want in an MBA program.”

Because physicians want a program that gives them skills to assume leadership positions, PEMBA conducts comprehensive assessments and a trained facilitator is assigned to each student to support and challenge them to develop their leadership potential. The classes feature experiential leadership exercises, and team-building activities are provided throughout the program. Leaders in the healthcare industry present guest lectures throughout the year, offering insights into the joys and frustrations of leading healthcare organizations in today’s turbulent environment.

“PEMBA is very real-world oriented,” says Millermaier. “I am not sure a class of 30-plus physicians would tolerate anything else. This does not mean that there is not an academic component; it is always applied to real-world situations, which students appreciate. I enjoyed the stimulation and interaction with both my class and the faculty more than anything else.” Millermaier adds, “It has been a pleasure to get to know others with similar career paths. I have new friends and colleagues for life. Each of us takes out of PEMBA both the basics of business education and that which we need on our own. For physicians interested in advancement of their business skills, who want a short-duration, allphysician business education, I would say the PEMBA program is the obvious choice.”

Because busy physicians want a curriculum that enables them to start to have an impact as soon as possible, PEMBA features an intensive 12- month curriculum that allows students to put their new knowledge into the workforce sooner than many other programs. PEMBA also realizes that physician executives need a curriculum that provides an interdisciplinary teaching approach and a systems perspective, so customized inter-disciplinary education is one of the core competencies. UT also knows that physicians want a flexible program tailored to their busy lifestyle, so it delivers more than half of the curriculum using distance learning technologies. Traditional face-to-face learning has been consolidated into four one-week residence periods on the Knoxville, Tenn. campus for the parts of an MBA degree that do not fit into a distance learning format.

“It’s a balanced program,” Stahl says. “It facilitates a tremendous amount of sharing experiences and swapping stories. The residence periods bring students together so they can share ideas and swap stories and build camaraderie with each other and with the faculty. It’s always intriguing when they exchange information about how various business models and concepts work or do not work in different marketplaces and different medical specialties.” Stahl continues, “The average experience level among physicians who have been in this program is right around 20 years. To say there is an enormous pool of talent there would be an understatement. They may have days in which they feel fatigued by battling lawsuits or insurance companies, but they say to themselves when they come here, ‘I am going to acquire some new knowledge and skill sets so I can fight back and improve things.’ Call them intellectual weapons, if you will. It’s about physician empowerment.”

While some physicians may consider an MBA a luxury, Stahl says that in today’s environment, a post-MD education is a necessity. “Thirty years ago, a physician could graduate from medical school in a relatively stable environment, with stable reimbursement rates, without managed care, and with a nascent role of government. One could set up practice, maybe hire a good accountant to keep the books, and then focus solely on their clinical role. In a rapidly changing environment, it’s tough not to have the training, the skill sets and the credentials in business.”

Millermaier believes that a changing healthcare environment also encourages physicians to become medical entrepreneurs. “I think physicians have always been entrepreneurial. There is significant individualism among us, and with the emphasis on the physician as the ‘owner’ of patient outcomes, there is a natural tendency to be entrepreneurial. Programs like PEMBA help physicians to reach their entrepreneurial objectives.” Millermaier continues, “The merging of medicine and business is also becoming more overt. I think this is partly due to the complexities of both. Medicine is technically complex, which has driven costs significantly. Business has also become complex. Both disciplines are under the watchful eye of society and regulators, with the emphasis being on a balance between augmentation of business or clinical success and meeting the social needs of those we serve. Applying sound ethical business practices to support good clinical practices makes a lot of sense, and you can’t do one without the other. All stakeholders, including payors and consumers, expect it.” 

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