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Higher Quality of Services When Physician Executives Run Hospitals?

Posted Jul 26 2011 12:00am

I have most commonly worked in hospitals where the CEO's major strengths were in financial management -- they were not MDs. Once, in the Army, I worked in a hospital where both the commander and deputy commander were physicians. My general impression has been that the former executives tended to stress the need for quality of care but often had little real understanding about the processes for achieving quality or the true cost of these processes. A recent article caught my attention and asks the question whether hospitals should be run by physicians (see: Should Hospitals Be Run by Doctors? ), Below is an excerpt from it:

The conventional wisdom is that doctors should focus on patient care, and managers with a business or administrative background are better suited to running the day-to-day operations of a hospital. Among the nearly 6,500 hospitals in the United States, only 235 are run by physician administrators, according to a 2009 study in the journal Academic Medicine. But now new research suggests that having a doctor in charge at the top is connected to overall better patient care and a better hospital. The findings, published in the journal Social Science & Medicine, are based on a review of 300 top-ranked American hospitals in the specialties of cancer, digestive disorders and heart surgery. [The study author] tracked the professional background of each hospital’s chief executive and then compared the performance of physician-run hospitals with that of hospitals overseen by someone with a nonmedical background. The study found that overall hospital quality scores were about 25 percent higher when doctors ran the hospital, compared with other hospitals. For cancer care, doctor-run hospitals posted scores 33 percent higher....The research doesn’t offer any evidence as to why doctor-run hospitals appear to post better results, but [the author] said it may be because doctors truly understand “the core business of health.”....[The author] also noted that spending time caring for patients puts doctors in a better position to make the hard decisions that a hospital administrator faces. “M.D. C.E.O.’s are more likely to prioritize patients because patient care is at the heart of their education and working life as a physician,’’ she said. “When it comes to making hard budgetary decisions or rationing choices, M.D. C.E.O.’s may be able to make more informed decisions.”

I think that it is highly unlikely that there will be any significant movement in the direction of having more physician CEOs in U.S. hospitals. As noted in the article above, only 3.6% of hospitals are currently run by physicians although the appointment of physician CEOs may skew toward larger hospitals.The reasons for this conclusion is simple. First, there will be a limited supply of qualified physician candidates for such positions. Because the field of medicine is very broad, physicians who don't like direct, or even indirect, patient care can generally find other well-compensated positions that satisfy them such as in pharmaceutical companies. Moreover, many hospitals are being consolidated into large health systems for which skilled financial management is becoming even more critical. Most health system CEO searches will therefore focus on candidates with ever-increasing financial management expertise rather than a deep knowledge of clinical affairs.

In my opinion, one of the greatest challenges for finance-oriented, non-MD hospital CEOs is cost-cutting. In response to a call for budget cuts in hospital clinical units, the physicians and nurses in such units will frequently assert that the cuts will put patient lives at stake. Because of their lack of deep knowledge of clinical issues, these CEOs are often unable to refute such claims in any substantive way. Their only recourse, then, will often be to make budgetary cuts across all clinical units. A similar problem occurs for these CEOs when they want to invest in technology. They tend to focus on new tests, procedures, and operations with pent-up demand and high profit margins. They also may be reluctant to invest in the service infrastructure with quality implications such as IT without financial incentives. I have often had to struggle for additional capital investment in lab software such as the LIS.

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