Does Your Doctor Need an MBA?

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Tending to business matters takes up an ever-growing share of a physician’s daily workload. | iStock/Rawpixel

Chances are that during your last medical exam there were three of you in the room: you, your doctor, and your doctor’s computer.

For most of us, that’s the most obvious sign that the business of medicine is changing fast. As your doctor asked about your symptoms and health history, he also was creating sophisticated electronic medical records that eventually will be used for treatment, referrals to specialists, billing, and even to ensure quality control. Properly treating patients today requires not only an understanding of the most effective medical therapies, but also leadership, teamwork, and complicated data analysis – skills traditionally taught in business schools, not medical schools.

That, too, is changing: Nearly half of all U.S. medical schools, including Stanford, now offer dual MD/MBA degree programs.

“I went into medicine with the ‘country doctor’ ideal in mind,” says Christopher Krubert, a physician and operating partner with the private equity firm Advent International who teaches The Business of Healthcare at Stanford Graduate School of Business. “But I realized pretty quickly the complexity of being a practitioner makes it impossible to focus solely on clinical care. You can’t get away from it. And that world has gotten even more complicated in the past 20 years.”

Back then, Krubert says, “80% of your job was being a clinician, and the other 20% you were a businessman. But today the business side takes up more than 20% of your time. So where’s that time coming from?”

As physicians struggle to answer that question, we asked Krubert to discuss the ongoing integration of medical and business training. He received an MBA from the Stephen M. Ross School of Business at the University of Michigan in 1993 and an MD in 2000 from the University of Chicago, where he trained in emergency medicine. He advises businesses in the health care industries.

So what’s driving the need to make doctors smarter about business?

I count nine major factors, everything from the logistics of patient care to the complexity and treatment of illnesses, to consumer awareness among patients. But it starts with industry consolidation. Insurance companies are acquiring competitors, merging and getting bigger, in part fueled by the passage of the Affordable Care Act. But hospitals are consolidating too. The local hospital is going by the wayside, and hospital groups are getting bigger and more powerful. The doctors feel that their clout is getting less and less, so they’re moving toward consolidation themselves.

Most people assume a doctor just needs to know how to bill patients and work with insurance companies. You’re saying it’s more involved than that?

Think about the logistics of patient care today. Because we can keep people alive longer and the population is aging, those people naturally have more medical complexity. And then there’s the obesity trend; it’s rising across the U.S. Both of those realities trigger multi-disease states — diabetes, heart disease, pulmonary issues, musculoskeletal issues, psychosocial issues, to name a few. The patient may require many specialists, and someone has to coordinate that care.

Which is why doctors need to learn more about leadership and teamwork?

The practice of medicine was historically that of an independent practitioner — one doctor treating one patient. Today, doctors have to increasingly work with many more practitioners, care coordinators, and others to care for a single patient. And the treatments themselves are getting more complicated. Gene therapy, more complex pharmaceutical and therapeutic options. All that’s good, but it’s getting harder for a doctor to keep up with all of it. Being part of a larger group can provide the resources a doctor needs to optimize care.

Doesn’t operating in a larger business environment bring its own set of challenges?

Networks of physicians are becoming like air traffic controllers, attempting to navigate the complex world that is healthcare today. Some primary care doctors are now seeing 40 to 50 patients in a day. That can leave them with only four to five minutes per encounter, which often results in them referring the patient to a specialist. Through all this, they have to keep costs manageable, because cost has become a major issue. Seventeen percent of our GDP is now spent on healthcare, and that keeps going up. Everyone is focused on costs, and doctors are being stringently measured on cost and efficiency.

Is that all being done through electronic medical records?

Electronic medical records have become a necessary part of the process, although sometimes they’re frustrating in that they can add more time to the encounter while actually reducing the doctor’s interaction with the patient. The upside is that we can track and monitor data better. Plus, reimbursement is slowly moving away from the accepted “fee for service” to more of a value-based payment structure. Today, if someone comes to me with chest pain, I simply treat them and bill Medicare for treatment of chest pain regardless of the outcome of that patient. In the future the system will be looking at the outcomes of patients over time, then pay me more or less depending on the quality and efficiency of my services, partly based on patient surveys and partly on objective measures.

So that’s where data analytics comes in.

Data can be the grand clarifier of what’s working and what’s not, and doctors need to be championing it in their practices. But let me add that keeping things personalized and human remains paramount.

One of your Stanford students, Alexander L. Fogel, recently coauthored an article proposing that medical schools join with business schools to build a four-week clinical rotation into the med school curriculum that would teach new doctors leadership, teamwork, and data analytics. Will that help to solve the problem?

I think it’s a great idea and a great start. It’ll help young doctors understand what they’re getting into. You don’t want them going in thinking, “I’m looking for a career as an independent,” when in fact the environment is completely different. It creates an awareness of what’s going on and merges the important elements of medicine and business. It also shows them how to best navigate this system to achieve the best outcomes for their patients.

Are impending changes to the Affordable Care Act going to make this better, or worse?

Let’s step back from the political element and look at the overall healthcare market. Patients are getting sicker, but there’s not enough money to go around. The current cost escalation is not sustainable, so everyone is understandably focused on costs. The key will be to save dollars not by rationing but by looking for ways to be more efficient and cost-effective while still delivering great care. How the system will change exactly is up for grabs, but it’s still going to require a shift from the way doctors are practicing and the way consumers are expecting healthcare. There has to be a movement toward understanding not only what’s the best care, but also what’s the most efficient care for the best value. As I said, healthcare is currently about 17% of the U.S.’s entire GDP. If we cut out all of the inefficiencies in the system, I estimate that we can reduce that by about 20%.

Most of us like the idea of being treated by doctors who aren’t preoccupied with mundane things like billing and reimbursement. Should patients worry that their medical needs are becoming an afterthought?

I wish that wasn’t the case, but yes, for now I think that can be a risk. Doctors are human. It’s getting harder to practice clinical medicine. They’re working more hours, but often they’re not making more money and sometimes they’re making less. Can they sustain that before they give up? Will it start impacting patient care? Can we still attract the best and the brightest into the field? The first stage of addressing that will be to eliminate inefficiencies. Doctors need to become as efficient as they can. Any time you overload a system, there’s more room for error. At the same time, we need to ensure that practicing medicine isn’t all about focusing on costs — that doctors stay focused on the needs of the patient.

Is it tough to change physician behavior?

Physicians are strong-minded people. We want them to be. But they’re also highly intelligent people and used to understanding data. They’re open to changes that will help their practice get better. They understand the value proposition of running a smart business: Their patient gets better care, they earn a good living, and their life gets easier. They’re very responsive to rational choices and are willing to make changes if the outcomes are better.