Room to Grow: Trends in Hospital & Health System Physician Leadership

Overview

Physicians are at the center of healthcare’s fundamental transformation to a value-based care model that prioritizes population health management, improved patient experience and cost-effective quality outcomes. The COVID-19 pandemic has sharply underscored not only the critical role physicians play in care delivery, but also the need to alleviate major pressures on them, support their ongoing needs, and forge strong new levels of alignment to drive achievement of safety, quality, patient engagement and cost containment goals.

Producing such alignment requires physician leaders who can represent the needs of the clinicians both currently and post-pandemic, gain buy-in from them to drive change, and contribute important perspectives to the organization’s strategic development. The 2020 Survey of Hospital and Health System Physician Leadership from AMN Leadership Solutions examines how administrators view the current state of physician leadership and clinical alignment in their organizations, competencies most required for today’s physician leaders, and challenges and opportunities in developing them.

The clear overall message that emerged is that, while progress is evident, significant effort is needed to improve physician engagement and combat burnout, augment board-level physician participation, foster greater interest in leadership among doctors, and grow investment in their development. This inaugural Physician Leadership Intelligence Report synthesizes the key findings.

Survey Methodology

The survey was conducted in September 2019 by AMN Leadership Solutions, building on its expertise in permanent and interim physician leadership search and advisory services.  Over 200 executives responded. Key characteristics included:

• All executive levels participated, with a healthy 41% from the C-suite. (See Figure 1)
• 29% were physicians.
• 52% were from health systems and 31% from independent hospitals. Academic institutions comprised 8%.
• Diverse size and scale were represented: 27% with over $1 billion revenue, 12% at $500 to $999 million, 30% at $100 to $499 million and 31% under $100 million.
• 43% indicated that their doctors are mostly directly employed, 18% have mainly independents, and the remaining 39% said they have a “fair mix” of both. This breakdown is consistent with industry research that has documented the continuing shift to the direct employment model. A Physician’s Foundation/Merritt Hawkins survey found that “only 31% of physicians identify as independent … down from 33% in 2016 and 48.5% in 2012.”¹

Executive Level

Figure 1

Highlighted Findings

• Only 11% of surveyed organizations are currently led by a physician, with another 12% having had a doctor as a previous CEO.
• On average, doctors populate 23% of the typical hospital board.
• 24% of physicians have a strong interest in being physician leaders.
• 79% of executives describe physician relations with their hospital as somewhat or very collaborative.
• 38% consider their physicians extremely or very well aligned with their organizations’ value-based financial objectives.
• Personal leadership abilities, strategy/vision, and communication top the list of most-desired physician leadership competencies.
• Formal leadership training and individual mentoring are the most frequently used development strategies.

Trends & Observations

Five themes were evident in the results, and the remainder of this report examines these in greater detail.

Physicians in Leadership: Maintain Growth in C-Suite and on Boards

Much effort in recent years has been directed toward enhancing the levels of physician participation in the leadership ranks. The survey first sought to establish some baselines on attainment of that goal. While the trend line is positive, a minority of CEO positions are occupied by physicians. Only 11% of surveyed organizations are currently led by a physician, with another 12% having had a doctor as a previous CEO. The rest have never had one. Comparative industry data is limited, but a 2014 study placed the figure at 5%². Accelerating this upward trend entails:

• Understanding at the board-level the benefits a physician can bring to the top job
• Specifying the organization’s unique requirements for the right physician leader
• Recruiting proactively
• Implementing strong succession planning programs

Another spotlight area has been physician participation in corporate governance. Board membership at surveyed organizations averaged 13, with some as large as 60. The mean number of doctors serving on these boards was 3, or 23%. An independent review of the subject estimated a rate “generally under 20%.” The same study cited research asserting that these low levels are problematic: “the absence of physicians on the board is associated with a decrease of 3 to 5 percentage points in 3 of 4 measures of care quality.”³ The issue is that “most hospital boards tend to recruit members whose expertise centers around business experience and community leadership” rather than healthcare backgrounds.⁴ Organizations should harness current approaches such as competency-based board recruitment to expand and retain medical trustees.

Priority Need: Engagement and Alignment

Physician leaders are contending with a major issue today: eroding clinician engagement with their organizations and the profession itself. The Physician Leadership survey probed several aspects of the topic.

Overall Engagement

A mixed overall view emerged, with 44% stating their physicians are extremely or very engaged with the organization, 41% moderately and 15% slightly.

Physician-Administration Relations

Positive working relationships among doctors, management and staff are vital to success. As Figure 2 records, almost one-third of survey respondents believe those relationships are “extremely collaborative.” One typical comment cited “open communications and working together to fulfill the organization’s vision.” Another 50% maintain “somewhat collaborative” relations, implying room for improvement. Meanwhile, concern arises from the 1 in 5 where neutral to adversarial conditions exist. Some mentioned an “us versus them mindset” and “physicians being cautious about administration.”

Relations Between Physicians and Administrators

Figure 2

It is important to distinguish that this perspective comes chiefly from administrators. A major 2018 physician poll conducted by Merritt Hawkins found “46% indicate relations between doctors and hospitals are somewhat or mostly negative.” The enormous strains from the coronavirus crisis create risk of some exacerbated negativity, at least in the short-term.

Strategic Alignment

Another meaningful gauge is the degree to which physicians are aligned with the strategic direction and operational priorities of their organizations. Healthcare places a premium on “clinical integration” characterized by highly coordinated care and aligned management-physician incentives in pursuit of value-based outcomes. The survey found positive fit on two key dimensions, as displayed in Figure 3. Doctors were viewed by 38% as extremely or very well aligned with their organizations on value-based care financial objectives. Another 39% considered the alignment to be moderate. The numbers were nearly equivalent for “cultural alignment,” with 39% extremely/very and 36% moderately.

These results are promising, since the industry is in early stages of its value-based transformation journey. Organizations are upending the conventional physician leadership model, especially for service line chiefs, succinctly summarized by one respondent, “These leadership roles were voluntary and unpaid, and serving in them was felt to be an obligation of being a member of the medical staff.” Instead they are pursuing a combination of internal development and partnership with outside advisors to find and nurture “a new generation of leaders who can promote strategic and cultural alignment in the face of rapid change.”

Figure 3

Increase the Pipeline

A barrier to expanding clinical leadership is the unwillingness of many physicians to pursue the executive track. As shown in Figure 4, 24% indicated high degrees of physician interest in entering leadership positions, 39% moderate amounts and 37% little to none. While this data certainly implies existence of a reasonable candidate pool, more attention clearly needs to be directed to promoting leadership interest among physicians.

Physician Interest in Leadership Positions

Figure 4

Based on AMN Leadership Solutions’ practice experience, recommended strategies to boost candidate pipelines include:

• Continuously identify doctors with high leadership potential. A number of executives polled in the Physician Leadership survey admitted that candidates were “not identified well or consistently” or “tend to be the person with the least resolve to say no.”
• Mine the “moderates.” Experience shows that many physicians who express moderate interest levels would step up to leadership if offered the right roles and given appropriate support to succeed.
• Seek independent advice on candidates. Working with an executive search firm offers the ability to gain an external perspective and objective evaluation of position requirements and candidate evaluation.
• Allow time for leadership. Physicians will be unable to add these duties without some relief in clinical responsibilities.

Understand Current Physician Leadership Requirements

Getting the right physicians into the right leadership roles requires pinpointing today’s – and tomorrow’s – most needed competencies. Figure 6 displays the survey’s conclusions. The strongest demands are for those who bring:

• Personal leadership qualities that help manage for performance and enable team building. As a highly individualistic profession, medicine has generally not developed this skill set.
• Strategic capabilities, further evidence that physician leaders must help chart organizational direction.
• Communication skills which are essential to managing an increasingly broad array of internal and external relationships.

Physician Leadership Competencies

Figure 5

Focus on Highest Priorities

The Intelligence Report also asked in which areas physician leaders could deploy the required skill sets to generate the greatest impact over the coming year. By a substantial margin, Patient Experience and Care Quality Improvement garnered the most votes. Clinician Engagement was the next closest. Surprisingly, financial initiatives such as Cost Reduction and New Revenue Generation scored lower. That may reflect both the progress organizations have already realized in cost management as well as the urgency to improve the overall care experience in the face of rising patient consumerism and competition from non-traditional providers.

Encourage Change Agents

The Intelligence Report found that, for 38% of surveyed hospitals, physician leaders already function as “significant” change agents and another 37% as “moderate” ones. Applying this yardstick when recruiting candidates as well as fostering a change mindset through physician leadership development are becoming increasingly essential.

Remember that Requirements are Always Evolving

It is imperative for organizations to maintain a dynamic posture regarding competencies. The pace of change is accelerating and disruption of traditional care models is looming. One trend certain to continue is industry consolidation. Surveyed executives offered comments on implications for physician leaders such as:

• “MD leadership is becoming even more important. There are many moving parts which require understanding from a clinical and administrative point of view.”
• “Consolidation changes the focus to not only internal medical but also external value-based and population health aspects.”

Invest in Physician Leadership Development

A strong leadership development (LD) program is another critical success factor. One-third of surveyed organizations said they have such a program in place, but 47% do not and the rest are uncertain. Twelve percent intend to implement one, while 45% indicate no plans. Among those conducting a program, 73% said it is formal – good news since many LD efforts are ad hoc and lack maximum impact and long-term sustainability. Respondents fairly highly rated the efficacy of their LD programs, with 16% deeming them excellent and 55% good. These figures instill confidence that maintaining investment in physician LD should help organizations meet their objectives.

Deploy Multifaceted Leadership Development

Figure 7 shows that organizations are using a healthy blend of strategies, led by formal leadership training. Individual coaching and collaborative dyad/triad programs that pair clinical and administrative leaders are also prevalent. AMN Leadership Solutions advocates deployment of a variety of tools in order to avoid “one size fits all” LD programs and deliver training that meets individual needs. This approach is particularly important with an independent-minded group such as doctors.

Leadership Development Strategies

Figure 6

Barriers to Expansion of LD Programs

Given the evidence pointing to great value derived from formal physician LD programs, it is natural to examine what prevents organizations from initiating or expanding them. The survey sought individual commentary here, and several replies shown below capture some of the leading barriers.

Barriers to Leadership Development Growth

This feedback illuminates and dovetails with best practice guidance such as:

• Favorably resolve the time and compensation conflicts.
• Make physician LD a senior management priority.
• Get respected opinion-leader doctors to endorse the program and participate actively.

Conclusion

Healthcare organizations clearly recognize that successful navigation of the changing industry environment requires strong physician leaders. The Physician Leadership Survey shows that, on measures such as board membership, positive hospital-physician relations, and strategic alignment, progress is being made in cultivating effective physician executive talent. Yet the results also indicate considerable room for improvement with much work to be done. The five key observations derived from the report’s data help chart a path to optimizing leadership:

• Maintain Growth in C-Suite and Board Positions
• Priority Need: Engagement and Alignment
• Increase the Leadership Pipeline
• Understand Current Physician Leadership Requirements
• Invest in Physician Leadership Development

The need is urgent, the opportunities are significant, and the benefits are essential to long-term organizational success.