The Best Hospitals Are Managed by Doctors

Why The Best Hospitals Are Managed by Doctors December 27, 2016

Healthcare has become extraordinarily complex — the balance of quality against cost, and of technology against humanity, are placing ever-increasing demands on clinicians.  

These challenges require extraordinary leaders.

Doctors were once viewed as ill-prepared for leadership roles because their selection and training led them to become “heroic lone healers.”  But this is changing.  The emphasis on patient-centered care and efficiency in the delivery of clinical outcomes means that physicians are now being prepared for leadership.  

The Best Hospitals

The Mayo Clinic is America’s best hospital, according to the 2016 US News and World Report (USNWR) ranking.

Cleveland Clinic comes in second. The CEOs of both — John Noseworthy and Delos “Toby” Cosgrove — are highly skilled physicians.  

We can remove Cleveland Clinic from this list after they published an Anti-vaccine rant from Cleveland Clinic on 2/6/17.

In fact, both institutions have been physician-led since their inception around a century ago.  

A study published in 2011 examined CEOs in the top-100 best hospitals in USNWR in three key medical specialties: cancer, digestive disorders, and cardiovascular care.

A simple question was asked: are hospitals ranked more highly when they are led by medically trained doctors or non-MD professional managers?  

The analysis showed that hospital quality scores are approximately 25% higher in physician-run hospitals than in manager-run hospitals.

Other studies also find this correlation. Research by Nick Bloom, Raffaella Sadun, and John Van Reenen revealed how important good management practices are to hospital performance.  But they also found that it is the proportion of managers with a clinical degree that had the largest positive effect; in other words, the separation of clinical and managerial knowledge inside hospitals was associated with worse management.

Support for the idea that physician-leaders are advantaged in healthcare is consistent with observations from multiple other sectors.  Domain experts – “expert leaders” (like physicians in hospitals) — have been linked with better organizational performance

Why doctors make good managers…

What are the attributes of physician-leaders that might account for this association with enhanced organizational performance?

when an outstanding physician heads a major hospital, it signals that they have “walked the walk,” and thus have earned credibility and insights into the needs of their fellow physicians.  But we would argue that credibility may also be signaled to important external stakeholders — future employees, patients, the pharmaceutical industry, donors, and so on.

The Mayo website notes that it is physician-led because, “This helps ensure a continued focus on our primary value, the needs of the patient come first.”   Having spent their careers looking through a patient-focused lens, physicians moving into executive positions might be expected to bring a patient-focused strategy.

In a recent study that matched random samples of U.S. and UK employees with employers, we found that having a boss who is an expert in the core business is associated with high levels of employee job satisfaction and low intentions of quitting

Our research suggests that if a manager understands, through their own experience, what is needed to complete a job to the highest standard, then they may be

  • more likely to create the right work environment,
  • set appropriate goals and
  • accurately evaluate others’ contributions.  

Having an expert leader at the helm, such as an exemplary physician, may also send a signal to external stakeholders, such as new hires or patients, about organizational priorities.  These factors are revealed in new work soon to be released

Cosgrove suggests that physician-leaders are also more likely to “tolerate crazy ideas” (innovative ideas like the first coronary artery bypass, performed by René Favaloro at the Cleveland Clinic in the late ‘60s).  

Cosgrove believes that the Cleveland Clinic unlocks talent by giving safe space to people with extraordinary ideas and importantly, that leadership tolerates appropriate failure, which is a natural part of scientific endeavor and progress.

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