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Why independent doctors may want to consider going back to school to more efficiently run office operations
A few years ago, Anthony D. Cox, MBA, Ph.D., was doing some consulting work for a hospital-based radiology practice
He noticed an interesting trend in the practice’s annual patient satisfaction survey: Patients and their families were furious about … the parking.
“The biggest single complaint the family members and the patients had was that they had to pay for parking. They would say, ‘I go to the mall and I buy something at Cinnabon and they validate my parking ticket, but my husband gets a $50,000 surgery and I have to pay for parking,’” remembers Cox, a professor of marketing at Indiana University’s Kelley School of Business and chair of the school’s Business of Medicine Physician MBA program,
As much as physicians believe that patients evaluate them solely by their clinical performance, the truth, Cox says, is that patients judge physicians by the overall service they receive. It’s not a lesson taught in medical school; it’s lesson from business school, and Cox covers it with physicians enrolled in his MD/MBA program.
“Healthcare providers can learn from successful service retailers,” Cox says. “There are a lot of parallels.” Among them, he says, are site selection, building design, facilities upgrades and hours of operation. Medical practices that improve in non-clinical areas actually see increases in clinical satisfaction -a halo effect, Cox calls it.
Until recently, virtually all doctors avoided the business side of medicine. Instead of worrying about management skills, balance sheets and marketing plans, physicians did what they did best: care for their patients. Even physicians running their own practices focused more on patients and care, steering clear of networking, branding, market research and other tenets of small business.
But that’s changed quickly. In less than 25 years, the number of U.S. medical schools offering dual-degree MD/MBA programs has grown more than tenfold, from six in 1993 to more than 65 today, according to Maria Chandler, MD, MBA, a pediatrician who founded and heads the dual-degree program at the University of California at Irvine and a member of the Medical Economics Editorial Advisory Board.
Every year, 300 to 500 physicians earn MBAs, says Chandler.
An MBA makes sense to physicians looking to climb the administrative ladder at a hospital, pharmaceutical company or government agency. Entrepreneurial doctors launching new medical devices or biotech startups seem like obvious candidates as well. But what about physicians in small or midsized private practice?
Cox thinks they might benefit the most.
“They are running a small business, a really complex small business,” he says. “You have to make decisions on where to locate the practice, how to recruit the best people and train them and lead them, how to manage cash flows and deal with insurance reimbursement. There’s [information technology]. There are regulatory issues.”
These day-to-day business decisions can have a huge impact on whether a practice thrives or dies, Cox says. “An MBA is at least as relevant to somebody who’s in a solo or small-group practice as it is to somebody who works for a big system,” he says.
Cox’s program at Indiana University is geared exclusively for physicians. The curriculum includes all the subjects of a traditional MBA – accounting, strategy, economics, law, finance – but “they all circle back to how it can be applied to healthcare,” he says.
Simon Wu, MD, a primary care physician in Kankakee, Illinois, is one of Cox’s students at IU. He won’t get his MBA until August, but he’s already been inspired to use what he’s learning to improve operations at his independent solo practice. He recently embarked on a project to streamline the medication reconciliation process in his office, something that had taken up more than its fair share of time and effort.
After mapping out flow diagrams of how patients enter and make their way through his office, he created a system that reconciles medication with a patient three times, with the receptionist, a nurse and finally Wu himself.
“It seems to work,” he says. “It helps us get a much more accurate list of medications. It has saved us some time and has also improved patient satisfaction.”
Wu says business school has him feeling the same excitement he felt as a resident almost 20 years ago. It has him thinking differently about his future too, and how he fits into an evolving healthcare system.
“Eighteen months into my study, instead of being a burned-out primary care physician, it has really rekindled my passion,” he says. “I think that I would like to be part of the group of physician leaders that will help to change or redesign primary care delivery.”
Cox sees a different motivation from physicians enrolled in his MBA program than from traditional business school students.
Doctors, he says, are generally not on a quest to raise their net worth. Instead, he says, it’s as if they bring their Hippocratic Oath with them to their business classes, not just the “do no harm,” but an obligation to do good.
“The big driving motivation for them is to try to solve problems in healthcare,” he adds. “They start with a commitment to patient care.”
And one of those big problems in healthcare is that too many doctors do not know or speak the language of business, says Antonio Gamboa, MD, MBA, an internist and entrepreneur who got his business degree 10 years out of medical school.
His MBA program, at the University of Texas at Austin, had him in classes with business executives from other industries, including engineering, financial and oil and gas. He learned quickly that healthcare was way behind.
“It showed me that these industries were far more developed in terms of adopting standards, policies, procedures and safety protocols,” he says. “It really drew my attention to new ideas, new concepts, new ways of looking at problems I knew were present in healthcare.”
Aside from giving physicians the knowledge and techniques to improve their practice, an MBA can open doctors’ eyes to a different culture and a different way of thinking, one that’s more egalitarian, says Chandler, who also serves as president of the Association of MD/MBA Programs.
“We’ve been set up to think that we know more than we do,” she says. “I think just learning that-as bad as that is-in business school gives you a great understanding.”
In business, projects are planned and executed in teams. Students learn quickly that new ideas and solutions to problems can come from anyone in a group. In fact, it’s expected that good ideas will come from everyone. That’s a far cry from the hierarchical culture of medicine, says Chandler.
She was discussing that concept with a surgeon who has an MBA, telling him that everyone on a care team should be given a chance to provide ideas and input on treatment, that perhaps the best idea may come from anyone. The only exception, she told him, was maybe during a “code” situation.
To her surprise, he disagreed, saying that input from everyone might be even more important during an emergency.
“He said if that nurse or somebody else helping you resuscitate a patient knows something and is too afraid to say it, because you’re shouting orders, then you’ll not be as effective in resuscitating your patients,” Chandler says.
In addition to the team culture of business, an MBA can bring more practical benefits to physicians in smaller private practices, namely communications skills, accounting savvy and management expertise.
“Managing staff is not what most physicians got into medicine to do,” Chandler says, “But most physicians end up having to do it.”
Doctors with MBAs are better able to manage staff, she says. They also look at their ledgers through a new lens, trying to spot opportunities to improve efficiency without sacrificing quality.
“It gives you a greater understanding of how you can function in any role that you take on for your group or your practice,” she says. “I would argue that an MBA makes you a better physician, because you’re using your resources to treat patients more efficiently.”
Gamboa says he was immediately able to apply the lessons of business school – leadership, strategy and finance – and that they immediately paid dividends. “I was not only just reading about it and hearing about it in class,” he says, “I was living it.”
He remembers learning about cost accounting, a process in which a business closely examines every cost to see if resources are properly distributed.
“As I’m learning this, I go back and I start looking at my financials, I start realizing this facility is terrible for me. It’s costing a tremendous amount of resources. I shouldn’t even be there.”
While studying Maslow’s hierarchy of human needs, Gamboa decided to change the payment structure for physicians and nurse practitioners in the small post-acute-care company he and a partner had launched a few years earlier.
He lowered the company’s margin on the first dozen patients each provider saw, giving them more profit and the business less. It was a focus on quality, not volume. He hoped to improve his doctors’ morale, lower turnover, improve outcomes and build his business’ reputation.
“It was a gamble,” he says.
It paid off. Gamboa’s company, Elite Patient Care, based in Austin, Texas, took off after he received his MBA, going from two employees to more than 50 in just three years.
A flow chart
Physicians who return to campus for a business degree seem to fall into a special personality profile, says Chandler. While MD-only and business-only students score as opposites in personality testing-one clinical and the other entrepreneurial- MD/MBAs tend to show traits of both.
Like medical school, the MBA workload is heavy. Gamboa says he did as much reading, if not more, while getting his MBA than he did when he studied medicine. MBA programs are typically 21 months, with independent and online study complemented by once-a-month weekend sessions on campus and a longer stint once or twice a year. A few schools offer healthcare-specific MBA programs; most mix physicians with professionals from other industries, Chandler says. Tuition mirrors traditional MBA programs, ranging from about $30,000 to above $120,000.
Gamboa urges physicians to do some self-reflection before deciding on an MBA.
“I think there’s a flow chart, and I think you start with the question, ‘Are you satisfied with your career path, yes or no?’” he advises. “If you are the doctor of all doctors and your life revolves around the next hand you hold and the next interaction you have with a patient and you’re happy, why change it?”
But if a physician feels he or she could be contributing more, wants a new challenge or has an entrepreneurial passion, then look into an MBA program, he says.
“I’d had an inkling that I was missing something,” Gamboa adds. “I just could never vocalize it. It’s kind of like seeing the light for the first time. It makes sense now.”
Wu is also glad he did it. He says he’s more entrepreneurial than ever as he examines his practice’s balance sheets with new confidence and looks for even more ways to borrow from his MBA classes to find efficiencies, improve processes and strengthen his business.
“I run my own business,” Wu says. “I think a lot of solo practitioners that still are independent share some entrepreneurial spirit. We like what we do, and we would like to have control of our destiny.”