Why Aren't We Embracing Physician Leadership?

Thursday, June 22, 2017 | Larry Sobal

Why Aren?t We Embracing Physician Leadership?


It’s very common for me to encounter organizations (hospitals, health systems, ACOs and medical groups) that describe themselves as “physician led.” Some even have physicians in the role of CEO. But I feel it is more the exception than the rule when I work with an organization that has truly embraced physician leadership. And that continues to be a major head scratcher for me, since I can’t see how these organizations will be able to respond to the opportunities and challenges in health care without physicians playing major roles, if not the major role, in driving strategy and decisions.

What I’m talking about goes beyond some of my recent blogs addressing physician alignment and TCG deficiency in leadership teams, although those speak to part of the issue. The question I am struggling with is why some organizations simply can’t (or don’t want to) go beyond lip service when it comes to building a culture, structure and processes where physicians have a predominant (or at least equal) voice in the Board Room, C-Suite, at the service line, at the department, and even at the physician practice level. Before I offer some opinions on why this is, let’s start with why it should be a common occurrence in the first place.

You are all aware that CMS has increasingly launched health policy and reimbursement changes that task health care organizations to provide higher quality care, decrease costs, and improve outcomes as rapidly as possible. Making the significant improvements necessary to be successful in these programs is not an achievement organizations can do without substantial physician leadership. They not only need physicians to be participants and engaged, they need physicians to be leading and driving change. Why? The reality is that physicians play a large role in the complex mechanisms of health care delivery and drive 75 percent or more of all quality and cost decisions. That’s a mighty large percentage, which translates to significant financial losses if physicians aren’t leading and owning the many changes needed to be made.

Here’s another example. More and more physicians are employees rather than owners of their practices. An American Medical Association study released recently found that the percentage of physicians who had an ownership stake in their medical practice had slipped to 47.1%. That's the first time it has gone below 50%, and is down from 53.2% in 2012.

When physicians legally own a practice, they have ultimate leadership and governance authority through being shareholders and establishing a physician board of directors. But as employees, physicians often either have no formal place in medical practice governance or may only serve in an advisory capacity with no real power. Especially for physicians who once were a private practice and are now employed, it becomes critical that they are given true leadership in the vision, strategy, operation, and oversight of the practice so they maintain a sense of ownership, even if they don’t have ultimate legal or financial control. I see it time and time again, where failure to do so causes employed physicians to feel less invested in the practices' success, in addition to being disengaged in, or even oppositional to, the success of their employing organization.

So why do some organizations fail to embrace the value of physician leadership?  Here’s an observation. When I work with an organization that is truly physician led (defined as not just having a physician CEO and/or a CMO, but having extensive physician leadership and influence in virtually all key aspects of the organization) they are quick to point out that they can’t imagine functioning any other way, and that it is just a natural part of their culture. Conversely, when I encounter an organization that has not embraced physician leadership (again, the rule versus the exception) it’s usually that they haven’t experienced extensive physician leadership and can’t grasp the benefits or realities of how to do it.

Unfortunately, there are some worst case scenarios where administrative arrogance (or naiveté) simply doesn’t value what physician leadership would bring and executives don’t want to abdicate any power to physicians. In my TCG (trust, consensus and grit) scenario noted above, this goes beyond lack of trust to the point of lack of belief that physicians have value to add to key decisions and strategy. In those instances, you often find examples where physicians have had initiatives they were invited to offer opinions on that were already partially developed, or that they were asked to accept when delivered to them fully developed.

The reality is that physicians play a large role in the complex mechanisms of health care delivery and drive 75 percent or more of all quality and cost decisions.

In all fairness, I should note that there are occasionally instances where the physicians are incapable of stepping into leadership roles either due to lack of interest or the inability to come to the table without destructive behaviors or personal agendas, but I have found this to be rare.

So how do we trigger a shift to where health care organizations begin to really embrace physician leadership? It undoubtedly needs to start at the top. Hospitals and health systems have historically regarded physicians as customers. This is obvious from the language used in many hospital mission, vision or strategy documents.

However, the leading-edge hospitals and health care systems have redefined the relationship between physicians and the institution, and consider each other partners in the delivery of services to their only customer—the patient. This physician compact requires a dramatic shift in viewpoint from both the physicians’ and the administrators’ perspectives, and seems to be a hallmark of many organizations that have achieved dramatic new levels of meaningful engagement of physicians in leading strategy and improvement initiatives. Some characteristics that would be indicative of this approach include physicians consistently being put in roles to lead and partner with administrators to do real work to act upon improvement opportunities, and having regular instances of information, resources, and responsibility being shared among administrators and physicians.

Aside from making sure that Boards of Directors and C-suites are well stocked with a diversity of physicians, and that those physicians have significant authority and influence, possibly the easiest way to start is to utilize dyad leadership models—when an administrative leader and a physician leader are closely partnered in a shared and complementary decision-making relationship. Or better yet, use triad leadership models that elevate nursing and other health professional leadership to the team.

But just naming people to become dyad or triad teams is not enough. Once the dyad or triad leadership teams have been identified, the organization must also take actions to support them effectively. While this support will necessarily be highly specific to any individual organization, initiative, and set of teams, some common questions will need to be addressed in any effective support plan:

  • How do we choose the right teams so that the leaders ‘fit’?
  • How do we have clarity of the dyad/triad roles – outlined in a solid, shared understanding of roles and responsibilities?
  • What leadership skills and capacity are necessary and how do we train the team to co-lead?
  • What are the processes to manage conflict and obtain commitment to work through differences?
  • How can we maximize the effective use of the physician’s time and avoid wasting it?
  • How do we build aligned incentives so the physician does not feel like they are sacrificing their personal income to participate?
  • How will we provide the physicians (and team for that matter) with timely, credible data to make fact-based decisions?
  • What communication systems will be necessary in order to keep all stakeholders informed and build trust throughout the initiative?
  • How do we teach problem solving to merge business and financial decisions with the clinical challenges and pitfalls of any innovation?
  • How do we give dyad/triad teams formal access to the executive team to “listen, respond and create results together” to build multi-level collaboration across institutions, divisions and silos?

It’s my observation that an organization’s degree of overall physician engagement is proportional to the extent to which they embrace physician leadership. Consider this survey by Gallup that highlights the importance of engaged physicians. For one hospital alone, there was a 26% increase in productivity for engaged physicians over disengaged physicians. In other words, one engaged physician added an average of $460,000 in patient revenue per year. Not a source of revenue to ignore when many health systems only have about two percent operating margins to work with


Illustration: Lee Sauer


Larry SobalLarry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.


About the Author
Larry Sobal

Larry Sobal, MBA, MHA, is CEO of a yet-to-be-named cardiology practice which is transitioning from employment to an independent physician group effective January 1, 2019. He has a 37-year background as a senior executive in physician practices, consulting, medical group leadership, hospital leadership and health insurance.

To contact, email: larry.sobal@gmail.com

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