Do Doctors make better Hospital CEOs?

By Dr Sweta Jalan

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Hospital management has become much more than medical management. People management and business decision are vital for its sustainability. Sweta Jalan asks who is more capable of running hospitals- a doctor or a management pro?

"With great power comes great responsibility"- Voltaire


Today’s hospitals are successfully being run by doctors and non-doctors. A much debated topic for years has been: is a difference in quality of services, profit margin, patient outcomes or management principles between hospitals led by physicians vs. those led by non-physicians. Medical management is a fundamental function of a hospital but sustainability of this institution is dependent of a multitude of factors; something as minor as electricity failure can lead to fatality in a hospital; inequitable budgeting can result in a drop in quality of services; purchasing the right medical equipments to hiring the right professional and technical talent, all contribute significantly to patient outcome. A hospital CEO has the daunting task of juggling the management of various medical and non-medical departments. While a doctor CEO may trump a non-doctor CEO when it comes to medical knowledge, a non-doctor CEO, most often a management grad, is better trained to run organizations, bringing in best practices from the business world as well as their expertise in people management. With the rapid corporatization of the hospital industry in the last three decades, the organizational structure of hospitals has transformed into that of a complex service-industry, so can hospitals be run like any service-centric organization? Does a doctor need a formal business education to lead a hospital or does running the business of medicine come as naturally to doctors as does the practice of it? Which training- management or clinical- equips a hospital leader to form well-informed decisions in hospitals? Dr. Sweta Jalan speaks to hospital leaders in search for the answers.

Swami Swaminathan, Executive Chairman, Manipal Health Enterprise

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If by a leader we mean, a person to whom people look up to as a role model and one who sets a positive agenda; who is a proactive agent of change; who is passionate on delivering positive outcomes in everything the person is engaged in; then a leader must have a vision, must be courageous, should live up to a high level of ethics and finally must be a realist. I do not think the skills for a healthcare leader needs to be any different from the skills required for any leader. No different from running any intense service-oriented organization where it is extremely important to be  genuinely customer centric such as being empathetic, truly caring, agile in response and being sensitive to accessibility and affordability of the product or service that the organization provides to the communities it seeks to serve.  Beyond this, the general requirements of managing people, processes, technologies, keeping the organization financially strong and future ready will be key to running a successful hospital.  

In any business knowledge and understanding of the underlying domain is always beneficial. However from a leader’s perspective medical education and experience need not necessarily translate into well informed business decisions when it comes to running hospitals successfully. A leader must have the necessary attitude and learnability to develop solutions based on continuous learning on related areas, having a global mindset to learn about global benchmarks and best practices and build a team of experts such that the collective wisdom results in cutting edge management.

Management training is necessary to run any business including hospitals. However this does not mean a formal management training through B schools and the like. Any sort of exposure, be it formal or informal, to hone in skills in the areas of business strategy, sales and marketing, customer relationship management, people management, technology appreciation, corporate finance and accounting, mergers and acquisition dimensions will be necessary to operate a successful hospital from a leader’s standpoint.

There are a great many examples of the non-doctor hospital executives, which I believe are perhaps born leaders or are leaders who have the attitude and learnability to be successful. Such successful leaders demonstrate aptitude for new learning, have the ability to build a great team around them, they lead from the front taking on new challenges and coming up with out of box thinking and not being hampered by legacy thinking of this-is-how-it-was-always-done syndrome. There are a lot of specialists turning entrepreneurs. They are either start-ups or by and large  have not yet reached a global scale both in terms of size and complexity. I think it does not matter if you are doctor leader or a non-doctor leader. Successful corporations, no matter which industry, will seek leaders who are transformational, who infuse employees with a sense of purpose and engage them in pursuit of something beyond themselves. Aspects such as cross cultural appreciation, being technology savvy, capable of building lasting partnerships, global mindset, constantly innovating to keep the organization always future ready  are  more likely to be sought for people  to assume leadership positions. More power to them.

Dr. Ravindra Karanjekar, CEO, SevenHills Hospital

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Primarily, one needs medical knowledge to run a hospital. A medical background helps the operator get respect, inside knowledge and prevents them from getting easily deceived by consultants. Managing consultants, senior nursing staffs and technically skilled staffs can only be handled by a doctor; all other functions are handled by a non-medical person. Usually non-doctor led hospitals segregate medical services as an independent vertical- headed by the medical professional; finance, legal, HR, purchase is the CEO’s domain. However, such promoters sometimes feel overpowered by senior doctors and medical administrators. Therefore their control is limited to the non-medical staff to run the hospital.

Ideally, a healthcare leader should have an understanding of the problem/ disease, should effectively balance finance and quality, monitor patient satisfaction and strive to continuously upgrade the satisfaction level in the hospital and maintain discipline in the institution. Patient care should always remain at its core. At the same time, they should adeptly manage patient centric-activity and doctor centric activities. However, not every medical professional is capable of running a hospital. One also needs to have the flair for management. Otherwise, he/she fumbles with the finance, balance sheets, preparing cash-flows etc. Formal training like an MBA or an MHA equips a doctor with discipline and provides strategic direction to their thoughts. Non-medical hospital leaders successfully running a hospital or group of hospitals have basic management skills, a good experience, cordial relationship with the doctors and medical knowledge to the extent required for discussion. Ideally, any person running a hospital should have experience in the medical field for at least 5-7 years.

Non-doctor-led or doctor-led also depends on the philosophy of the promoter. Non-doctor hospital leaders usually run hospitals as a business- ROI, profitability, EBDITA are their key words, whereas patient satisfaction, good healthcare and transparency in healthcare are the keywords of a doctor CEO. For example, if a department wants a particular machine, a doctor CEO will focus on the urgency and need for it rather than the ROI. But a non-doctor CEO will more likely focus on the ROI. Hospitals prefer doctor CEO but some hospitals chains in India, especially the corporate ones, prefer non-doctor CEOs. However, there is a serious dearth of doctor CEOs. All doctors should know how to run a hospital efficiently- with one eye on profitability and the other on patient safety and patient satisfaction. Therefore, medical administration should be included in the MBBS curriculum. Management skills can also be acquired from experience. Doctors without management training have also emerged as great administrators.

I feel doctor CEOs can also allocate resources more wisely. For example, if a consultant insists on an expensive equipment/medicine, a medical executive is better able to understand the justification and maybe can advise an alternative accordingly. He/she can impress or pressurize their decision on a senior doctor and confidently take the responsibility of consequences, whereas a non-doctor CEO has to be dependent on a person with medical knowledge for his decision.

Gautam Khanna, CEO, P.D. Hinduja Hospital and Medical Research Centre

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As we know good leader needs a focused vision and a clear communication to drive that vision across the organization. He also builds empowered teams that deliver results, and nurtures future leaders. He ensures that efficient systems and processes are in place and all legal and ethical compliances are met. Ensuring performance of the organization through successful execution of the strategies is also an important trait of a good leader. In addition to these, a healthcare leader requires two essential qualities: 1) sound understanding of medical environment and 2) compassion and empathy towards patients. Commitment to patient care has to be the most important aspect to lead any healthcare organization.

The hospital industry is like a service industry where consumer care and satisfaction are the chief objectives. The only factor that differentiates hospitals from the rest is that their service delivery directly impacts the patient’s life, and a small mistake can turn out to be fatal. Thus, patient care is the prime objective, overriding concerns of profit.

As the scale of hospitals and the resulting complexities are increasing, there is a growing trend of non-doctor led hospitals in India and abroad, primarily because there is a realization that hospital administration is a vast area compared to medical management. Medical services, which require medical expertise, are just one, though most critical, aspect of running a hospital. Other departments such as operations, HR, legal, marketing, purchase, finance etc., are also crucial and need equal attention. A patient needs to get good support and service along with excellent clinical outcome during the entire course of treatment and all areas of the hospital contribute to that experience.

As a hospital CEO, one has to be accountable and responsible for the successful operations of the hospital including best clinical outcome and excellent patient experience delivered in and ethical value based manner. Since it is nearly impossible to have an up-to-date knowledge of everything for any individual, the different issues that arise in a hospital require expertise from the relevant functional experts. In case of a management problem, a leader should be able to ask the right questions from the right persons and employ the collective expertise of all departments to make decisions.  My advice to fresh graduates is that experiential learning and job rotation, which are an essential part of hospital administration, prepare one to lead an organization in the future. So they are very important for one’s career growth and young aspirants should proactively acquire new skills and experiences.

In summary, a CEO should have the ability to ensure that all departments work in sync, solve problems and deliver results, which is only possible if there are good systems and processes in place.

Dr. Kapil Garg, Strategic Business Head, Paras Healthcare

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To be a successful healthcare leader you must be aware of the opportunities around you- be alert and ready; be active to analyze and seize opportunities; be dynamic to encourage the organization to align itself for the opportunity; be ready for change and adaptation; be ready for the risks; stay connected, engaged and updated- industry connections and knowledge is essential; stay positive and energetic- even in times of turbulence, after all every black cloud has a silver lining; recognize and mentor talent- the right kind of people and teamwork is essential; share your failures and celebrate your successes; and most importantly have a vision and stick to it. Many a times, when an organization is going through the metamorphosis of growth, the vision with which you initiated certain aspects is lost. It is imperative that you keep reminding your people about the vision and mission of your initiatives so that the focus is never lost. Running a hospital is complex and different from running any other organization. It involves a number of stakeholders – employees, patients, attendants, doctors, technology, etc. On an average a 250 bedded hospital would have an OPD of around 500 patients per day! So you are expecting around 1000 patients and attendants alone coming in the hospital. With so many services, delivery centers, personal and technology interfaces, running a hospital is similar to running a city.

The universal management principle- ‘know’ your service- applies to healthcare also. Doctor leaders have basic understanding of specialties, its prevalence, associated treatment, scope of medical infrastructure required and the usage of the same. A doctor can lead a hospital, treat patients and also ensure that the venture is profitable. If a doctor has to run a specialty from the scratch he can decide on the basic requirements and on the evolutionary addition. They are abreast with the latest medical developments so they can upgrade the medical infrastructure accordingly.  A non-medical professional will always have to consult a doctor. However, we can see a change in the same as hospitals now work on service models that include many stakeholders. A hospital is today not just limited to the OPD and IPD department, it encompasses service delivery through many non medical departments– front office, billing, accounts, call centre, etc. Gone are the days when a doctor was the owner, administrator and also the decision-maker. As an industry matures, the technicality associated with the same also becomes tougher. In today’s changing scenario of venture capital funds and IPOs, a doctor needs the support of financial, operational and accounting experts. Management training will help doctors to become allrounders. A doctor who has a formal management education can

  • understand the concept of service and the attributes associated with it

  • understand management terminologies and principles and apply them for achieving management goals- economies of scale, return of investment & EBITA values are of prime importance.

  • provide educated support to the doctors and the medical staff

  • maintain quality indicators and parameters of services delivery

  • measure clinical outcomes; based on the feedback the processes can be adapted to ensure optimization of resources.

However, success is not a one man show; it is a combination of teamwork, dedication and guidance. The successful hospital chains either had an inflow of resources, sound organizational structure and above all the right medical guidance. Non-doctor hospital executives can ensure sound financial situation and quality of non-medical services, but the medical aspects, quality of medical services, understanding of the medical operations is better in the hands of doctor-executives. Doctor leaders can ensure that frugal innovation is a part of non-medical domain and medical services. On the other hand, non-doctor executives are able to lay more emphasis on service delivery; a learning bent of mind and the attribute of working in teams always works in their favour.

In all, hospitals require leaders that can steer the organization in the right direction. They may be doctors or non-doctor executives. It’s their skills that matter most.

Manpreet Sohal, CEO, Global Hospitals

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Although it may be felt that having physicians in leadership position is valuable for hospital performance, there is no published study that substantiates the same. In the past, the hospitals were run by doctors but that has changed over a period of time. There is nothing to suggest that hospitals led by physicians perform better. If the CEO has the following qualities it does not really matter, whether he is a physician or not.

The first quality any healthcare leader is expected to have is empathy, coupled with compassion towards patients. He/she needs to be passionate about his/her roles, needs to lead the teams from the front, support creativity, be patients’ advocate and ensure that decisions taken are in the best interest of the patients and should have a walk-the-talk agenda at all times. Leaders need to understand the importance of setting a common goal which should be embraced by all. They should be effective in motivating others to improve. Successful leaders require collaboration with team members and taking a team approach to improvement. Healthcare leaders should be able to build trust and, it can only be earned by a leader who consistently demonstrates honesty, integrity and an unfaltering commitment to the highest standards of ethical behaviour. Healthcare leaders must empower individuals within their organizations to collaborate across disciplines to bring about effective changes based on well-defined action plans.

In healthcare, we have to serve people who do not come to us by choice and are in distress, pain and need delivery of medical outcomes and patient care. For the same to be achieved, staff needs to be motivated all the time thus motivation is also a key quality that a healthcare leader must have. A leader should drive the system in sync with the mission and vision of the organization. Other than any leadership qualities required in any sector, a healthcare leader must have knowledge of the industry, current trends in policy, legal aspects, innovations in IT and deep understanding of medical and non-medical processes

Leader need to have a focus on the patient and the customer. A customer in a hospital is not the patient but the attendant. While the leader has to ensure the delivery and sustain quality that can help better medical outcomes and faster patient recovery, equally important is the customer focus. Focusing on customer problems with passion is a winning management plan in any business. A leader needs to understand the customer needs and priorities and should ensure the team is engaged and trained to serve the customer. A customer may have many financial and psychological issues that may require help and resolution. Hospital administrators should take rounds of patient rooms and waiting areas and have ears to the ground so as fix the issues at the budding stage. The healthcare scenario is changing and a successful leader needs to change with the same. He needs to understand the patients’ requirements and make a plan in collaboration with his team to bring about the requisite change while keeping physicians engaged. The teams of healthcare professional needs to have only one common goal- serve the patient

Medical education does help as many of the decisions have clinical involvement but that’s not the prerequisite to make a well-informed decision. A good team can take care of that. Experience and common sense help to take many right decisions. A formal degree in hospital management is not a must have but a good to have. The following shall help you to take better decisions:

  • Share the vision with the team and ensure that all are on the same page. What has worked in the past must be replicated.

  • Speak to patients and understand from their experience, whether you are delivering or not.

  • Study the demographics and focus on conditions that are experienced more in your region and area. The hospitals that are closer to highway need to be more prepared for road traffic accidents trauma whereas some hospitals needs to better geared for cardiac issues due to lifestyle issues of the inhabitants.

A hospital is a treatment center for a patient but for a healthcare provider it is a complex and interdisciplinary workplace. One key person responsible for keeping this infrastructure running smoothly is the hospital administrator. As the head, a hospital administrator oversees various departments and the entire hospital. These professionals work on one side with physicians and simultaneously manage personnel, finances and facility practices according to set of regulations, laid down procedure and policies. They not only have to keep abreast of new laws and regulations in the industry but also advances in medicine and medical technology. A hospital administrator also represents the institution at boards, quality forums, with peers and community. Formal and informal practical education programs in business or health administration specific to hospital administration can help the leader to be better equipped in hospital organization, strategy, healthcare, quality, business law, finance and economics and healthcare technology systems.

One common goal

Medical knowledge is a pre-requisite for a hospital leader but a degree is not the sole source. A thirst for learning and a rich experience in the field have created a great many non-doctor hospital leaders. Doctor or a non-doctor, patient-centric leadership is what matters most.