An increasing number of physicians are working for medical groups owned by a larger hospital or health system, and there are a couple of factors driving this trend. Culturally speaking, medical school students in their 20s and 30s are becoming less interested in striking out on their own, given the uncertainties in today's healthcare system. There's also the lifestyle component: Employed physicians have a little more control over their schedule.
At the root of this employment trend is the theory that hospitals that directly employ physicians get higher rates from insurers and better position their organizations for value-based payments. The belief is that having salaried physicians helps control clinical volumes and makes it easier to perform under capitated contracts.
As with any group, though, a medical group requires a strong leader. According to Jason Petros, a consultant in the healthcare practice at executive search firm Witt/Kieffer, there are two basic iterations of a medical group leader.
One is a non-clinical president or CEO who will report to the board of directors, which serves in an advisory capacity and is populated by physician leaders and representatives.
"In the other iteration you've got a physician CEO with an operator who is not a clinician," said Petros. "The difference is really related to the maturity of the group. In more mature entities, you'll typically have a physician CEO who's really driving the operation. In organizations further back on the curve, you want someone who can bring physicians on board."
So when a medical group is contemplating finding a leader, what are some things to keep in mind?
DEPENDENT ON NEED
"I worked with a group recently whose group had grown exponentially over the last five years," Petros said. "As they continued to grow, they realized the market was demanding additional physicians be employed -- this is a group with 500 providers -- and often when you're talking about the success of a medical group you're talking about the ratio of losses you're taking on.
"Every organization benchmarks it differently," he said. "This organization was focused on the investment they were making per provider. In that case, they needed sort of a business mind. They were great in terms of clinical quality. What they weren't so great on were the financial and operational aspects."
A contrast to that would be an organization that's smaller and not experiencing the same issues related to finances, operations and structure. Such groups generally need someone who can rally physicians around standards of care.
Ultimately, the right leader is completely dependent on the needs of the organization, though what's generally needed is a clinical leader working side by side with an administrator.
DOLLARS AND CENTS
No matter the situation, financial orientation is important. Any group that doesn't have a margin won't have a mission, and so an understanding of the fundamentals of finance is important.
In some medical groups, the budgetary responsibility still relies on the hospitals' bottom line, in which case the most important sort of leadership skill set they should seek is emotional intelligence, and how to partner with others to achieve the desired outcomes.
"You've got to know your way around the financials, but if you're making decisions just based on the financial element you're probably missing the larger picture," Petros said. "You can really think of it as a fight for access. The battle lines are really being drawn on access to care. You're seeing Blue Cross Blue Shield open primary care centers in Dallas and Houston. You're seeing Walgreens experiment a little bit. So as private equity continues to look at healthcare, medical groups are a core component."
THE RIGHT CANDIDATE
One of the most important aspects of finding the right leader centers around the idea of succession. In an ideal world, more mature groups should have a succession plan in place for clinical leadership.
The best practice, according to Petros, is to promote from within. Internal candidates know the culture and the relevant market influences. In cases where medical groups are less mature, the right leadership choice is more dependent on the priorities of the organization.
"You're putting investments into your group that will result in financial gains down the line," said Petros. "The worst case scenario is you have someone who doesn't realize what that investment is, so you're investing and not making it back on the back end. That's where you see divestments happen. It can cause issues related to revenue cycles for providers. The domino effect happens very quickly. Getting leadership right is incredibly important relative to the overall health of the system."
A final important tip: Define the job. And don't settle.
"One medical group leader might have a skill set that's misaligned with what your expectations are," said Petros. "A financial mindset could be completely wrong for somebody who needs clinical standardization. Identify the charge and expectations appropriately on the front end, because if you get that wrong you're in trouble."