How physicians can become excellent CEOs

Doctors should consider being CEOs: ©Kay A, Peopleimages - stock.adobe.com

Young people decide to become doctors for the best of reasons—to heal and to help. That idealism informs their professional lives, too. But health care is also a matter of economics—it is the largest single sector of the US economy, accounting for almost 18% of GDP. There is a role, then, for the physician-CEO, who can bring together the clinical and business aspects of health care.

Right now, however, only about 15% of US health care and life-science CEOs are physicians. According to the most recent McKinsey Physician Leadership Survey, however, almost 60% of physicians are interested in moving in this direction. And in important ways, they do not lack confidence—rather the opposite (see exhibit).

©McKinsey & Co.

To be effective CEOs, physicians need specific business skills—and these are not part of the medical school curriculum. More than 60% of physicians surveyed named skills, experience, and training gaps as the highest barriers to making the transition from clinical practice to business leadership. More than half also mention “perception barriers”—the assumption that doctors don’t have business acumen.

In short, because physicians aren’t seen as potential leaders, they don’t get the opportunities to develop the skills they need to become business leaders. To turn this dead end into a productive pathway, there needs to be consistent, focused leadership training that can channel the strengths of physicians—an analytic mindset, curiosity, and commitment to patients—to the challenges of the C-suite.

Consider one CEO we spoke to who was trained in the care of ICU patients, many of them with multiple problems. This physician couldn’t be a specialist in every disease or condition; her task was to draw on the expertise of others, evaluate tradeoffs, and work with the team to execute a strategy with the best chance of success. In her own estimation, she has brought these capabilities to being a CEO. She empowers her team to act, while she monitors what is happening and concentrates on the issues only she can decide.

Many physicians, though, find the transition far less straightforward. Based on an analysis of more than 20 years of data from 7,800 CEOs in 70 countries, McKinsey has identified six things that the best CEOs do better than their peers: setting the direction, aligning the organization, mobilizing through leaders, engaging the board, connecting with stakeholders, and managing personal effectiveness.

Would-be physician-CEOs, then, can start by honestly assessing their own strengths and weaknesses against these capabilities, and also seek out candid feedback. Those insights can shape how they adapt to the very different context of business. As one physician CEO told McKinsey, he was accustomed to “being right 99% of the time” in clinical practice. When he moved into the C-suite, he had to adjust to “being right 75% of the time.” Once he managed that conceptual leap, his clinical decision-making skills became a corporate strength.

Creating a cohort of physician CEOs who can bridge clinical and corporate worlds will also require institutional commitment—and imagination. Many health care organizations are ready to elevate physicians to high-level clinical positions, but they typically have not considered people in these roles as possible CEOs.

Overlooking or underestimating such a pool of talent is problematic, to say the least. The surveyed physicians acknowledged that they may have gaps, specifically in finance and deal-making. In interviews, current health care leaders identified other skills gaps as more important. Many said prospective physician CEOs need to strengthen their capabilities in leading teams and enabling colleagues. But these gaps can be filled, and physicians also have expertise in other, equally relevant domains. In the near future, major differentiators in US health care will include clinical change management, care model transformation, and personalized medicine. The value of a clinical perspective on all this is self-evident.

To build physician-oriented leadership pipelines systems that identify, develop, and elevate talent from within—think in terms of creating structured, meritocratic, longitudinal pathways that cultivate leadership. Among the practices that physicians themselves value are on-the-job training, degree programs, particularly early in their careers, and mentorship and coaching later.

For physicians who want to transition to business leadership, the change of role is not a change in mission: it’s still about healing and helping. Having a “broader impact on patient care” is the most cited reason for doing so. In second place: influencing health care innovation and transformation. As they see it, rather than help one patient at a time, they can influence the care of thousands. Preparation, evaluation, and perhaps a bit of humility would all help turn these worthwhile aspirations into lasting contributions.

“It is not the mountain that we conquer but ourselves,” noted Edmund Hillary, the first Westerner to ascend Mount Everest. For physicians who aspire to become CEOs, and for health care organizations looking for leadership, that is wisdom worth considering.

Amit B. Shah, MD and David G. Knott are senior partners and leaders in McKinsey & Company’s Healthcare and CEO practices.