Business and medicine

I have long contended that some sort of business education or degree should be mandatory for every practicing physician.

Skills like running a business and the art of negotiation are just as important as clinical aptitude. The medical profession’s lack of business skills is a major reason why physicians have lost control of their profession, and why doctors have so little influence in the health care debate.

Those who don’t think so are sorely naive and will be in for a harsh wake-up call when faced with post-graduation reality.

I’m happy to see that others agree:

A common fallacy shared by many medical students and pre-meds is that doctors are isolated from business practices such as marketing, management, and finance. A rude awakening is applied to anyone upon graduating residency when he discovers that the laws of economics apply to medicine just as easily as they apply to any other employment field. Many doctors are woefully unprepared for running a hospital or clinic.

Comments

Anonymous
Good idea.
Most physicians are just sheep when it comes to the business side of medicine. This would allow more of them to stay independent of hospitals and deal with the third party payers better.
Residency might be a better place for this training than medical school. Med students still have years to go before their first real job and might be better off doing business training just before finishing residency.
Are any readers here familiar with this program?
http://www.aafp.org/online/en/home/press/aafpnewsreleases/january04/mbaprogram.html
Ian Furst http://www.waittimes.blogspot.com
Having some business training would be a good idea but it is such a load of crap (sorry anonymous) that physicians are just sheep. I regularly hear it from my CA, CMA collegues yet it’s the physicians that negotiate significant salaries, make good use of the provincial/state lobby and rarely end up on the unemployment line. Yes there is good and bad but most do well and most enjoy the work well into their careers (I’m sure in no small part to having a certain amount of control).
100% agreed that training would be good but it shouldn’t come at the expense of the residency experience where many/most leave with a sense of purpose that later drives good business sense. If most small business owners started with such a sense of purpose I think fewer would fail.
Anonymous
I think that doctors are pretty smart and those with an orientation towards business figure it out. Most small business owners in America do not have business degrees. I have not seen a pattern of better management by MD-MBA’s than savvy MD’s without an MBA.
What is needed for those who want to be independent is mentorship.
What usually happens to most is more along the lines of what happened to Arrowsmith in Lewis’s novel–as apt to the medical profession today as it was 80 years ago. They are used rather led by their older colleages as they either figure it out, get use to being used, or just withdraw from dealing with business altogether.
Once people leave residency, we are all competitors. In my experience, residents seem either too busy or frankly too arrogant to listen (were we like that? I suppose).
Perhaps what is needed, and might could happen, is something like SCORE for doctors. An organization of older physicians to give business advice to new graduates.
The problem then becomes arrogance again. I remember that when I first went into practice I picked out the advice I thought apt and discarded the rest as suitable for a past era—and have since learned the sense of it the hard way.
The internet is a resource for mentoring. Independent Urologist’s blogs on his successes and failures in managing his practice are great.
Anonymous
Where I see docs get in trouble in running their business is usually in things that are very basic and well understood by many small biz operators with no formal business education. A great many books are out there to teach the basics of planning, managing cash flow, controling expenses, etc. If someone doesn’t have the initiative to get that on their own, they need to be managed.
The other common problem is people who get those things out of a book without attention to modifying it appropriately for medicine. Marketing for example is very different in medicine. But their are plenty of cheap paperbacks on that subject as well. Tradition is also a fair guide. Some things really haven’t changed in 100 years in surviving as a physician. One thing certainly has–accounts receivables are worth nearly as much.
I have seen otherwise smart people sign insurance contracts on which they lose money on each patient-and think that they are going to make it up on volume!! Now that I think about it, the biggest fool in this regard had and MBA and executive experience. Sometime it is better to not get too fancy and just stick to basic cost/price analysis.
A common piece of advice to new physicians is to sign onto every insurance program out their. And a common result is a very busy doctor who isn’t making money. It doesn’t take a business degree to know that price matters. Just common sense.
Conciergedoc
80-20 rule applies. 80% of all doctors are sheep, 20% are also good at business.
I’ve got a simple way to see how bad you are in business. Check your A/R (that’s accounts receivables for the sheep). If you have more than 5% of a/r sitting more than 45 days, you are a sheep (or you prefer to just practice medicine out of charity, which not an indictment)
I hear many stories from a friend of mine who is a national practice management consultant. He once identified a 4 physician orthopedic group who has $2,000,000 in A/R. When they where trying to find out why they are working harder, but making less, they discovered the reason was not patients who cannot pay, it was claims sitting unfiled, unfollowed, or unposted. Now the office has 2 dedicated staff for billing. He counseled the group to either outsource the billing entirely, or bring in 2 more to bring the A/R down qiuckly. Their response – are you crazy?!!, 2 more billers will cost us $80,000 + benefits!!! They completely missed the boat.
He’s still trying to convince them and their A/R has since grown to $2.2million.
Doctors are innately good at one thing, taking care of the sick. Money confuses us and make us feel conflicted. That’s why we don’t talk to patients about their bill, their copay, their drug bills, etc. It’s in the nature of teh field to be a sheep, despite being among the country’s brightest and most diligent, self sacrificing professionals.
When we were well compensated, no one cared and we could just focus on practicing good medicine. Now, every doc -especially pcps are learning phrases like ROI (laser hair, anciallries), A/R, collections, outsourcing billing, managed care contracts, negotiations, lobbying, etc.
We need “comprehensive sheep reform” starting in medical school. A Basic 4 week practice management internship during their last clerkship in the 4 th year to again be repeated for all residents during their last rotation in residency.
I teach my medical students about this all the time – it’s the only way I can guarantee more doctros not only graduate, but stay in teh practice of traditional medicine. And to be honest, they all enjoy it very much. In fact, it gives them hope that they can still go into primary care and not have to see 30 patients a day by just runing the practice correctly.
Anonymous
I completely agree, and as an MD/MBA student, I’m doing what I can to gain a business education to complement my medical education. I think it is unlikely, however, that formalized business training becomes a part of the medical school curriculum, or even that the growing number of medical students in MBA programs will reach a critical mass large enough to elevate the business acumen of the average practitioner. I believe this because it is still largely a faux pas to discuss money, finance, or business aspects in the academic medical setting (at least as far as students are concerned). The few of us that do express interest in business training usually claim to have the interest for the sake of working in the non-profit or free-clinic setting, because its blasphemous to express a desire to profit by delivering care. I think a concerted effort needs to be made by the academic medical community to at least elevate the conversation on financial issues, and bring the topic of money out of the shadows so students can express interest in learning about the topic without ostracized.
Anonymous
Not all medical residents should get a full MBA but a little business training or mentoring should be given to all and having a few residents going for an optional MBA would help quite a bit.
As for mentoring from older docs, that would help for some things like tracking AR but the traditional model that worked for them is dying. Signing up for many (or any) third party payers, overloading with too many patients (to ensure plenty of business at the cost of poor access), and other things worked 20-30 years ago should now be avoided if physicians want a success practice that can weather the worsening financial environment.
IVF-MD
Is it good for doctors to learn more about running a business? ABSOLUTELY. 100%.
Is formal MBA training the best way to go? In my opinion, ABSOLUTELY NOT.
There are some very basic skills that are invaluable for a successful private practice doctor to have, but I’ll let Seth Godin tell it to you in his own words. I found this article very helpful!
I have found my colleagues in the field of infertility to include some of the sharpest business minds I have ever met, and none of them have had formal MBA education. Reading good books and making friends with proven successful entrepreneurs are two ways to achieve this type of learning more effectively.
IVF-MD
For those who don’t wish to read the entire article that I cited in my previous comment, here are the five skills to master if you want to have a successful business, according to Seth Godin, marketing guru:
1. Finding, hiring, and managing supergreat people
2. Embracing change and moving quickly
3. Understanding and excelling at business development and at making deals with other companies
4. Prioritizing tasks in a job that changes every day
5. Selling — to people, to companies, and to markets

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