Why a physician may be the best choice to lead an ailing organization

In conventional business wisdom, the Chief Executive Officer either rises through the ranks to the top role, or is hired away from that position at another company. 

The conventional thinking behind this conventional choice: external hires boast a solid record of executive performance, while internally-sourced CEOs know the company’s DNA, with the CEO1000 Tracker showing most are promoted from positions of COO, president or executive vice president.

For many healthcare companies, however, an unconventional choice may better serve the organization: the physician CEO.

According to the Advisory Board there is a rising tide of physician executives across hospital and health system C-suites and research shows physician-run hospitals score approximately 25% higher on hospital-quality scores and overall hospital quality.

With our years in executive healthcare positions, both as former CEOs of healthcare companies, we propose that physicians are uniquely qualified to lead not just hospitals, but all types of healthcare organization to success. 

Here are three main reasons:

Physicians understand healthcare. First, physicians literally understand the business of healthcare from the bottom up-something no financial executive can match. Who understands the nuances and complexity of care delivery better than a physician? Who has more experience at making decisions under pressure than an individual who literally has made life-or-death choices in a split-second? The “business of healthcare” is as unique as healthcare is personal, requiring an understanding that can take years to acquire as a provider of care. It’s not necessarily the technical knowledge of medicine that separates a physician CEO, but rather an intimate understanding of what goes into the delivery of compassionate, yet efficient and high-quality patient care.

And given that CEOs are ultimately held responsible for the financial health of their organization, there are few more suited to matching resources with care needs than a physician, who has spent years practicing in the trenches in the face of declining reimbursement. While they value care delivery above all, the necessity of adjusting to new payment models over the last few decades – especially as healthcare has cycled through FFS, PPO, ACO, VBC and other models – has forced them to build not just a short-term solvency strategy, but a long-term organizational vision. This nimbleness, earned from pressure to care for their patients often on a shoestring budget, gives many physician CEO’s the creativity and fortitude to deliver financial results and not skimp on quality.

Physicians understand the challenges. Another advantage of hiring a CEO with a background firmly based in “boots on the ground” is the intuitive knowledge of how to manage a workforce with disproportionately high levels of burnout. A recent study showed doctor burnout is costing the U.S. health care system about $4.6 billion a year, costs no organization can sustain. The study identified systemic burden like bureaucracy and paperwork as major contributing factors to burnout. Other research has identified an association between burnout and indirect organizational costs like medical mistakes, less satisfied patients, and malpractice litigation.

Physician leaders know that combating burnout takes more than a Groupon to a yoga class. Rather, research suggests interventions at the organizational level were more successful; that is, leaders must prioritize less on providing coping strategies and more on minimizing/eliminating potential stressors. Of course, a non-physician CEO can implement these interventions, but given that 54% of physicians report burnout, they may lack the same insight as an individual who understands why they are so important. It is one thing for a business professional to walk into a meeting with tired docs or practitioners and ask for compromise or understanding.  However, when a physician can intimate that they truly understand what they are going through after their own years at the bedside, often the CEO becomes one of them.

Physicians understand data. Third, modern physician leaders are also intimately familiar with the growing role of data in healthcare delivery. Based on its integration into their medical practices, they understand the need for data integration to achieve actionable insights – using clinical data to achieve better individual and population outcomes and improved reimbursement, especially in a value-based environment where hitting targets equals revenue.

While most executives conceptually understand that Big Data helps to identify and understand trends, many companies are not focused on using data and analytics to drive strategic decision making. But physicians instinctively understand how data drives performance in virtually every industry, whether a large health system, a pharmaceutical company, or even a car manufacturer or retail operation.
Combining a medical background with a business management puts a physician in an even more competitive path to the c-suite. A good MBA program in health administration can buoy business fundamentals with sophisticated, real-world business curriculum in finance, operations, management and entrepreneurship.

Physicians can incorporate these skills into their already impressive arsenal of management capabilities as they lead their companies to optimal wellness.

John Figueroa, MBA, is a member of Pepperdine Graziadio Business School board, and former CEO of Genoa Healthcare, a behavioral health pharmacy, telepsychiatry, and medication management company.

Christopher Krubert, MD, lecturer at the Stanford Graduate School of Business, is an advisor to a variety of businesses in the healthcare, wellness, and hospitality/entertainment industries, and led the growth of ApolloMD from 2006 - 2013, building it into one of the industry’s leading multi-specialty physician services firms.