Why Empower Physician Leaders About the Business of Healthcare?

Why should we care about empowering physician leaders concerning the business of healthcare? Can physician leaders rely primarily on their clinical skills? Do physician leaders need to understand the business and management issues in the healthcare industry? Is this need for knowledge about the business of healthcare particularly potent for entrepreneurial physician leaders in immediate care and outpatient delivery modes?

When the healthcare industry was stable and smaller in the 1980s, there was little need for such knowledge. In such a “golden era” of healthcare, many physicians focused solely on clinical skills and hired an accountant to manage the stable business side. Now that the healthcare industry has become the most dramatically changing industry, one of the largest and one of the industries most maligned by politicians in the United States, the need to understand the changes has grown exponentially for physicians in leadership roles.

There are huge increases in the demand for healthcare services as the Baby Boom generation ages; as obesity and adult-onset diabetes (diabesity) become the No. 1 self-inflicted healthcare problem; as new, expensive healthcare technology emerges; as new pharmaceutical products become available; as politicians try to capture more votes by covering more patients; and, as the growth of the Internet educates more patients about their conditions. Indeed, there are forecasts from the Centers for Medicare and Medicaid Services (CMS), that total expenditures on healthcare services will surpass $2 trillion in 2007 and account for 17 percent of gross domestic product (GDP). This is a strong growth from $1 trillion and 14 percent of GDP in 1996. We are spending more on healthcare in total dollars and more as a percent of the total economy.

Along with the growth in healthcare expenditures, the government is assuming an increasingly larger role. Thanks to growth in Medicare and Medicaid to deliver healthcare services to elderly and poor patients, approximately 50 percent of the aforementioned healthcare expenditures were controlled by federal and state governments as of this writing. Since Congress added prescription drug coverage in Medicare, there were estimates of the various plans adding between $400 million and $1 trillion to the preceding share of healthcare expenditures passing through government hands. At the time of this writing, several presidential candidates were proposing plans that would further increase the government’s role in healthcare. Since a number of politicians were proposing plans based on universal coverage and mandated coverage, those plans could add approximately 45 million patients to the rolls of insured patients. This will add additional demand for healthcare services controlled by the government.

As deductibles rise in many health insurance plans, and as health savings accounts (HSAs) increase in popularity, patients are increasingly interested in the delivered cost and quality of healthcare services. This will present opportunities for physician leaders who can deliver healthcare services with lower cost and higher quality.

Patients are increasingly interested in convenience and access. Due to increasing time pressures and more dual career households, patients will demand greater convenience and access to healthcare on their available schedules, not the provider’s schedule. These growing patient demands for convenience and access will present opportunities for physician leaders who understand how to deliver greater convenience and access with low cost and high quality. Competition on the basis of the speed of delivery of quality healthcare service will grow.

As of this writing, new advances were being made to increase the quality of delivered healthcare services. As an increasing number of Americans become aware of the Institute of Medicine (IOM) report that estimates as many as 98,000 deaths annually due to medical errors, more patients are demanding improved quality in healthcare services. The power of information systems was being implemented among healthcare providers including hospitals to reduce errors and control costs. Process improvement, six sigma quality improvement programs, and lean healthcare systems will be growing opportunities.

In 2007, these changes were occurring so rapidly that patients, physicians, other providers, employees of healthcare providers and consumers of health insurance could no longer sit back and assume stability. Indeed, the speed of change in healthcare will likely accelerate due to the increasing role of the government, increasing healthcare insurance cost pressures on employers, and increasing pressures by patients for higher quality and lower costs.

Let us return to the original question: Why empower physician leaders with knowledge of the business of healthcare? Given the breadth and depth of the above changes in healthcare, someone or some group must lead the delivery of healthcare services in the context of a myriad of changes. Due to their Hippocratic Oaths and clinical skills, physician leaders are the best group to lead improvements in healthcare because they can think through the impact on patient outcomes. With knowledge of the business of healthcare, physician leaders can focus on improving patient outcomes while lowering costs and improving quality. They can design new ways to deliver healthcare services and improve processes, all while focusing on improved patient outcomes. These statements are especially relevant in the immediate care, ambulatory surgical center and other outpatient centers in healthcare because those venues are relatively unconstrained and flexible. 

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