A Physician Entrepreneur's Blog - Part 1

April 16th, 2012 5 Min read A Physician Entrepreneur's Blog - Part 1 Blog
Part 1: The Business of Medicine - Navigating in a New Era of Medicine, A Call to Action! Including an interview with Prof. Edward F.X. Hughes, MD, MPH, of the Kellogg School of Management, Northwestern University, Evanston, Illinois From Resident to Entrepreneur Just out of residency, I became the physician administrator and chief financial officer in our small, two-person private practice in a major metropolitan area. It was immediately blatantly obvious to me how ill-equipped I was to manage the practice's business, management, and financial affairs, in addition to starting my own surgical practice. With no prior business or fiscal education, "on-the-job-training" took on a whole new meaning. When discussing business matters with my fellow physician colleagues at every level of training and practice at that time, I realized I was not alone. This unfortunate trend continues today. In fact, 94 percent of a group of 125 residents to whom I lectured on the topic feel somewhat or not prepared on business of medicine matters, and a University of Michigan Medical School (UMMS) study of 58,294 AAMC medical student graduation questionnaires revealed that, while 92 percent of respondents were confident with their clinical training, nearly 60 percent felt unprepared for the managerial demands of medical practice. As young physicians who will now be practicing in an era of medicine unlike any other, the provision of education in the areas of career development, the business of medicine, practice management, and personal and professional finance is imperative. With the imminent changes in the healthcare environment, it behooves every physician and healthcare provider to become well versed in the matters that will affect the delivery of the excellent healthcare that we have spent the first third of our lives training to provide our patients. Historically, physicians have been afforded the luxury of focusing on rendering patient care in the absence of concern over revenue generation and management, with minimal attention to practice administration or economics. Unfortunately, this elective absence of physician input into the decision-making process has allowed those who do not know the value of patient-physician relationship in positions to shape healthcare into what we are witnessing today. It is my contention that all physicians and healthcare providers must become engaged at early stages of our education and training to harness what is left of our ability to care for patients in our own way. Physician to Economist - Words of Wisdom I posed the question of why physicians need to learn business aspects of medicine to surgeon-turned-healthcare policy expert Edward F.X. Hughes, MD, MPH, a professor at the Kellogg School of Management, Northwestern University. According to Dr. Hughes, "The world of medicine is changing." The important trend in U.S. medicine is the corporatization of American medicine. Billions of dollars are at stake. This corporatization of healthcare finds physicians moving from being entrepreneurs in medicine to becoming factors of production of medical care, who can be owned or otherwise controlled. Large corporations want to capture the value created by this factor of production. Increasingly, physicians are becoming employees in the private and government sectors of healthcare. This megatrend results in part from the increasing difficulty of maintaining a private practice due in part to shrinking reimbursement rates, increasingly onerous administrative burdens, and increased regulation. The healthcare industry may well become more efficient through this process; however, physicians will lose their independence and their ability to remain entrepreneurial. I asked Dr. Hughes, "Since physicians are losing the independence afforded by being more entrepreneurial in healthcare, doesn't that obviate the need for us to learn about the business of medicine and healthcare economics? And if not, what can physicians do to contribute to solutions and enhance the future of the profession?" "On the contrary," stated Dr. Hughes, adding that, "Without physician-leadership, the healthcare industry will be much worse off. Overall, the current and long-term healthcare challenges facing the nation can be addressed and better outcomes achieved through physician involvement and leadership. At this point, there are no quick fixes for 'rationalizing the industry', underscoring the need for physicians to understand specifically how critical it is for them to understand health policy and economics. As physicians, we must assert ourselves as leaders in our healthcare organizations; i.e. private practices, hospitals, health plans and professional societies, as well as community and business organizations. The pursuit of additional degrees, such as MBAs and PhDs, will also better equip younger physicians to play leading roles in the formation and evolution of healthcare policy and delivery from this point forward." Physicians to Healthcare Leaders - Taking Our Seat at the Table of Change If we are capable of caring for the human condition and its pathology, we are certainly equipped to grasp the additional business and financial concepts required to understand the delivery of healthcare. Recent evidence provides proof: A 2011 study of the top 300 hospitals in the United States found that the best hospitals are typically run by physicians, not managers, with overall quality scores for physician-run hospitals about 25 percent higher than for other hospitals. However, the very foundation on which we can become engaged based on the traditional medical education model is lacking, but there are solutions that I will leave you with here. It is to the advantage of physicians and patients, both individually and collectively, for physicians to understand the business, policy and economics of healthcare, because U.S. healthcare is a business. Physicians are encouraged to actively pursue leadership roles in every aspect of medicine, healthcare administration and local, regional, and national health policy. If we, as physicians, fail to participate on the decision-making level in every healthcare setting, we will increasingly continue to be dictated to, instead of being contributors to and creators of the solution. References: 1)Patel, MIt'sh S. MD, MBA; Lypson, Monica L. MD; Davis, Matthew M. MD, MAPP. Medical Student Perceptions of Education in Health Care Systems. Academic Medicine: September 2009 - Volume 84 - Issue 9 - pp 1301-1306. 2) Goodall, A. Physician-Leaders and Hospital Performance: Is there an association? IZA, June, 2011. http://ftp.iza.org/dp5830.pdf