The Doctor-Exec Is In: To quell physician unrest, some hospitals are dumping lay executives and replacing them with doctors
January - February 2003
After sacking its longtime chief executive officer last month, East Jefferson General Hospital quickly plucked a replacement from what has become an increasingly fertile source of emergency executive talent: the medical staff. Mark Peters, M.D., senior vice president and medical director of the publicly owned hospital in Metairie, Louisiana, was tabbed as the interim replacement for Peter Betts, whose controversial, two-decade reign alienated many physicians at the 475-bed facility.
The First Line of Defense
Just one week earlier, in a similarly high-level shake-up at Mount Sinai Medical Center in New York, the longstanding president, Barry Freedman, was summarily dismissed and replaced by the hospital’s chief physician. The elevation of Larry Hollier, M.D., Mount Sinai’s senior vice president of medical affairs, was aimed at helping “anchor the hospital’s future as a physician-led organization,” officials said.
The promotions highlight a growing recognition among many hospital boards that the best way to keep physicians happy in times of crisis is to make one of them the boss. “Past administrations did not build trust with the medical staff,” said David Kastl, M.D., the chairman of the board at East Jefferson. “We needed to find a way to build that trust — hence a doctor (is named CEO). I think M.D.s with training in business affairs bring a good blend to a hospital. They have a true perspective on patient care. I do believe this is something that is going to be a national trend.”
Though Peters does not hold a traditional advanced degree in business, East Jefferson board members viewed his appointment as a way to help repair a deep rift with the medical staff. “I can have all the degrees in the world after my name,” he said, “but if I can’t show that I can perform successfully, that’s a problem.”
Betts, the deposed CEO, triggered a significant stir among East Jefferson’s medical staff when a contract dispute involving reimbursement levels led to the departure of a popular, 10-member radiology group several years ago. That episode underscored a deteriorating relationship between administrators and physicians at the hospital, leading to a decision to replace the mercurial Betts. “We were at a crossroads,” Kastl said. “We needed new leadership, new direction.”
Peters, displaying some of the diplomacy required in his new role, would not directly blame his predecessor for the “tensions” so often associated with the “many challenges” in running a big-city hospital.
“But I think boards are becoming increasingly aware that to move forward in a positive way there has to be a good working relationship with the medical staff,” said Peters, who has formally applied for the full-time CEO job. “And I think physicians are being recognized for the values they bring to the table. It’s not an easy jump for the boards to make because there's a history of nonphysician leadership in most hospitals.”
Back to the Future
So far, only a handful of physicians have assumed the No. 1 job at hospitals in recent years. But the noteworthy promotions suggest that this focus on physicians “might just be the beginning” of a trend, said Howard Horwitz, vice president of professional development at the 11,030-member American College of Physician Executives in Tampa, Florida.
Struggling to develop or reinforce a strong working relationship between medical staffs and administrators, hospital boards “see the senior doctor as the linchpin in making that relationship stronger,” Horwtiz said. “It wasn’t too long ago, a couple of decades or so, when many hospital CEOs were physicians,” said Horwitz. “There have been a lot of people over the years who've been saying we ought to be going back to that.”
Roger Longenderfer, M.D., president and CEO of four-hospital Pinnacle Health System in Harrisburg, Pennsylvania, said the number of physician-CEOs probably will increase because more physicians have been returning to school for advanced business degrees as an entry into management. Longenderfer started making the transition about 10 years ago, earning a master’s degree in business administration. He moved into the top job at Pinnacle about a year ago after being hired three years earlier as chief medical officer and senior vice president of medical affairs.
“In pockets of the country, you’re seeing a little bit of a trend,” he said. “There are more and more opportunities for physicians to at least be considered. But I’m not sure yet how many physicians are going to want to put in the time and energy and pay the price (to move up the ranks of management). A lot of physicians feel they’ve gone through a lot already to become physicians.”
This new breed of physician-CEO is a small fraction of top administrators — only about 200 physicians now serve as hospital CEOs, which means that just 4 percent of the 5,000 acute-care hospitals in the United States are run by doctors, according to the American College of Healthcare Executives. Among the ACHE’s 23,000 members, only 28 are doctors who are also hospital CEOs. “There are a lot of very talented physicians who can run hospitals if they have the proper training,” said Thomas Dolan, president and CEO of the Chicago-based ACHE. “But it’s still unusual.”
Burned Out of Practice
For some physician-CEOs, the shift in careers is viewed as another challenge. Others have moved into the executive suite after becoming fed up with government regulations, the hassles of managed care, long hours, and lower pay.
Peters said he decided to switch to the business side after about a decade as a family practitioner because it provided an opportunity for a “broader impact” on improving health care in his community. However, many of his colleagues are relinquishing clinical practice because of the frustrations of managed care, increased government regulation, and lifestyle issues.
“Some physicians don’t see the light at the end of the tunnel,” said Peters, who left full-time practice in 1994. “They’re stepping back and saying, ‘OK, what other career options do I have? How do I alter my career to have a little more control over what’s happening?’ Fortunately, that wasn’t one of the driving forces in my decision.”
Motivations aside, doctors with a flair for finance provide a set of skills that’s hard for any hospital to pass up, said Denny Shelton, chairman and CEO of Dallas-based Triad Hospitals, which has tried to foster a physician-centered culture at the 48 hospitals it owns or leases.
“They bring a lot to the table,” Shelton said. “If they have an interest in doing this, I think the industry will do very well by having many more of them move into management. It’s a lot harder now to find good administrators.”
Dolan said a graduate degree in health administration is almost required for a hospital CEO job. Horwitz agreed, saying clinical background and the support of the medical staff alone are not enough.
“I don’t think any organization would do this — move a physician up to the No. 1 position — just for public relations purposes,” Horwitz said. Though his appointment at Pinnacle was not precipitated by massive physician revolt, Longenderfer said the board “was hoping to find someone who could create more of a consensus-building atmosphere with the medical staff. They wanted someone who could speak the language and understood the problems.”
Source: Reprinted with permission from Modern Healthcare, September 30, 2002, Copyright Crain Communications, Inc., 360 N. Michigan Ave., Chicago, IL 60601.
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