There’s a new hospital CEO in town


I can’t mention the physician by name, because he is currently in contract negotiations.  But he lives and works in a Midwestern town of several thousand people, a town where the major social event of the year is a fall festival that features a parade down Main Street.  The physician, let’s call him Dr. Smith, has been practicing there for nearly 30 years, and he intends to keep living and practicing there until the day he dies.

Smith was raised in a modest home in the town, less than two blocks from where his medical office is now located.  His grandfather was the county sheriff, and his wife was homecoming queen.  Smith’s dedication to the townspeople shows through in everything he does.  He has long staffed the local nursing home, served as physician for high school’s athletic teams, and delivered over a thousand babies.

Like many rural physicians, Smith’s practice has been relatively untouched by the sweeping changes health care has experienced elsewhere in the nation.  His is an underserved community with high numbers of poor people.  As Smith puts it, “Our town has not been a target for expansion or takeover by large health care corporations.”  It is a place where loyalty counts for a lot, and Smith and his nurse of over 20 years have been caring for the same patients and families “forever.”

Nevertheless, change is finally descending on Smith’s practice, in the form of a new president and chief executive officer at the hospital where he admits his patients.  The new CEO — let’s call him Mr. Jones — arrived this past year from a hospital in another state, where he had realized a substantial financial turnaround and improved patient satisfaction scores.

Knowing that the typical tenure of a hospital CEO is a bit over 3 years and that fewer than 5 percent remain in their jobs for 20 or more years, Jones is naturally eager to make a big splash — the sort of impact that shows up almost immediately in a hospital’s bottom line.  Aware that boosting hospital revenues in the short term is extremely difficult, he has instituted a number of cost-cutting initiatives, some of which have adversely affected the care of Smith’s patients.

Of equal concern to Smith, however, is Jones’ plan to hire a marketing professional to come to the physician’s office and distribute customer satisfaction surveys to his patients.  Specifically, Jones plans to place 10 percent of Smith’s compensation “at risk,” contingent on the results of the customer satisfaction survey.  From the CEO’s point of view, this makes perfect sense.  It will incentivize Smith to please patients, showing that Jones’ leadership is having an impact.

But below the surface is a clash of cultures in health care.  From the CEO’s perspective, health care looks like an underperforming business that needs a kick in the pants to improve its performance.  The CEO’s toolbox includes organizations charts, process maps, financial statements, and satisfaction surveys.  His emphasis is on collecting data and demonstrating quantitative improvements in such parameters in as little time as possible.

From the physician’s point of view, however, such initiatives appear to interpose third parties between health professionals and their patients.  Many physicians resent the implication that the way to improve medical practice is through their wallets.  Perhaps most irksome to Smith is the fact that he has spent his entire career caring for the patients in his hometown, while the new CEO has been around for less than a year.

How does a physician know he is doing a good job?  Not by looking at charts tracking quantitative indicators such as average length of stay, cost per discharge, total operating margin, claims denial rates, or days of cash on hand.  Instead, Smith knows individual patients.  He is less interested in financial performance than in his neighbors’ health and welfare, which he follows using the most important tool at his disposal — the relationship he has built, often over many years, with each patient.

The physician sees medicine very differently from the CEO.  He is not a financial turnaround artist but the town’s doctor.  His mission is not to “deliver results” but to care for patients.  He will not be moving to another hospital or health system in a few years.  He is as deeply rooted in the town as the old oak tree outside the country courthouse.  Someday — hopefully far in the future — he intends to retire and be buried next to his parents and grandparents in the town cemetery.

Jones’ attempt to control Smith’s practice belies an important truth; namely, that the most important events in health care occur not in the executive suite of the hospital, but in the relationships between individual patients and physicians.  If for some reason Smith left his practice, the impact on his patients and the community would be devastating.  By contrast, if the new CEO packed his bags and left tomorrow, most townspeople would scarcely notice the difference.

Gargantuan efforts are currently underway to computerize, systematize, and centralize health care.  If such efforts are to bear enduring fruit for patients and communities, everyone needs to remember something: no matter how sophisticated and adept CEOs may become at managing the bottom line, at the core of health care lie human relationships between patients and the physicians who care for them.

Richard Gunderman is Chancellor’s Professor, Schools of Medicine, Liberal Arts, and Philanthropy, Indiana University, Indianapolis, IN.

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