Physicians as Executives: Barriers to Success

By Johnson, Richard L. | Frontiers of Health Services Management, Spring 1997 | Go to article overview

Physicians as Executives: Barriers to Success


Johnson, Richard L., Frontiers of Health Services Management


Introduction

In this article, Barbara LeTourneau and Wesley Curry have accurately highlighted the many reasons why physicians are dissatisfied with the changes in medicine and some are showing a strong interest in managing healthcare organizations. Many physicians are disgruntled and believe their futures will be more difficult in the years ahead. Having interviewed a great many physicians in the past few years I have often heard them remark, "I did not go into medicine to have to deal with all the paperwork and nonpatient care aspects that are now part of every day for me-I would just like to take care of my patients."

While this type of remark is common among physicians of all ages, it is most often heard from physicians who are at mid-career or beyond. On the other hand, some younger physicians believe the future will provide them with additional opportunities. Younger physicians in primary care medicine, however, are well aware that the trend of healthcare organizations purchasing practices may cause them to be tied to a salary arrangement rather than to follow in the footsteps of entrepreneurial physicians who develop their own practices and exercise autonomy in decision making.

The Good Old Days

In the good old days, hospitals were the centerpieces of the healthcare field. The old days of the organizational "three-legged stool" of trustees, physicians, and administrators all being part of the same hospital but unconcerned about coordinating their activities is now over. This began to change when Medicare adopted DRGs (diagnosis-related groups) and managed care became the instrument for controlling healthcare costs that were annually rising at a much faster rate than inflation. As employers turned away from indemnity insurance and toward managed care, and hospitals faced controlled rates from Medicare that typically accounted for 40 percent of their inpatient days, it became apparent to hospitals and physicians (the providers of care) that the free-standing community hospital and the solo practitioner were endangered species. Both hospital and physician groups recognized that the best way to defend themselves was through growth. Hospitals began to develop affiliations, to merge with other hospitals, and to acquire healthrelated businesses. Physicians opted to band together and form physician organizations (POs), independent practice associations (IPAs), single specialty groups, and multispecialty groups. In addition, physicians and hospitals recognized that greater strength could be gained by developing joint organizational efforts, which led to physician-hospital organizations (PHOs) and management service organizations (MSOs). These activities require a strong component of physician leadership, which was inevitable once the "Mom and Pop" era of healthcare came to a close.

All of these efforts by physicians and hospitals were focused on creating a situation that would make it desirable for managed care plans to contract with those provider organizations that could demonstrate an ability to meet the plan's financial and quality-of-care requirements. This reasoning led hospitals and physicians to aggregate size and resources; the greater the number of providers in one organization, the more likely it would be that the managed care plan would want to negotiate a contract for provider services. Once into a managed care contract, physicians discovered restrictions were placed on their clinical authority for ordering diagnostic and treatment procedures. Because physicians had long been accustomed to having freedom to make clinical decisions, the limitations for care imposed by the payers were viewed as unwarranted intrusions into the practice of medicine. Ethical and competent physicians resented these requirements but came to recognize this was only the beginning: It was a harbinger of the future.

The Technological Era

Controlling costs introduced a new element into the doctor-patient relationship. …

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