Need an MBA?
DO TODAY’S MDs NEED AN MBA?
It’s sad but true; practicing medicine today has become less like medicine and more like business. Said another way, the “business side of medicine” is increasingly important. While it is tempting to bemoan medicine’s seeming fall from grace, physicians trying to succeed in today’s ever-evolving market would do best to train their focus on the business side of their practice, because it’s not going to run itself. Of particular concern are specialists, such as anesthesia providers, working in hospital settings, who, in addition to their primary responsibilities to their patients, must also satisfy their larger customer base — the hospitals with whom they contract as well as the surgeons and other medical specialists they work with every day. Today’s anesthesiology practices don’t have to be told they face an increasingly corporate atmosphere and growing complexity in their relationship to hospital administration. Yet, it is a tremendous challenge for the anesthesiology practice to develop strong leadership with the business acumen, broad knowledge, and management savvy to navigate the new demands of practicing medicine.
One critical example involves the periodic negotiations required of anesthesiology practices and their leaders. Some are formal, e.g. hospital contracts; and others are informal, e.g. working relationships with surgeons. Certainly, the “modern medicine” environment, with its emphasis on volume, preventative medicine and a capitation approach to reimbursement has had a dramatic impact on how anesthesiologists practice as well as on the hospitals which require their services. The first step taught in MBA classes on negotiation is to understand the other party’s needs and objectives. As such, this modern landscape rewards the anesthesiology practice that understands the needs of hospital administrators, surgeons and other staff. These needs include staffing, utilization, quality control, cost effective treatment plans, and other day-to-day operational issues that impact productivity, patient outcomes, and costs. Clearly, the astute anesthesiologist should be looking for solutions that are financially expedient for both the hospital and the anesthesiologist: the proverbial “win-win” negotiating outcome.
When considering a formal negotiation, an anesthesiology practice must first determine its strategy. It is unlikely that each and every anesthesiologist in the practice will have identical concerns and a practice that comes to the negotiating table without clear-cut objectives is doomed from the start. The needs of the practice must be identified, clarified and consolidated with a focus on what’s most important for the group, in priority order. One of the bibles on preparing for negotiations of all types is “Getting to Yes”, by Roger Fisher and William Ury . They describe four main points of “principled negotiation”:
- Separate people from the problem
- Focus on interests, not positions
- Invent options for mutual gain
- Develop a “BATNA”: the group’s “Best Alternative to a Negotiated Agreement”.
Of course, all of this can be very foreign, if not uncomfortable, for the practice and its leaders. This brings up the question of “who.” When considering important formal negotiations, does the practice retain one or more experienced negotiators with the communication abilities and other skills needed to properly represent the group? If not, hiring professionals to negotiate on the group’s behalf may hold the practice’s best chances for a successful outcome. Though the anesthesiologists in the practice may believe that only they, with their intimate knowledge of the practice, can properly express their needs, it is wise to remember that the negotiation table is the venue of businesspeople, not doctors. An anesthesiologist’s needs can be explained, quantified and described;  satisfying those needs within the larger framework of the practice and the hospital (and other stakeholders) is the goal of a successful negotiation. Beyond an understanding of the practice they represent, practice negotiators must also be knowledgeable about the hospital’s administrative structure, financial outlook, operations, expectations, obstacles and outcomes. That knowledge and the skills to effectively communicate are critical to devising a realistic negotiating strategy and putting it into play.
Let’s consider the anesthesiology practice’s strategy in more depth. Part of the process for preparing to negotiate is refining “what we want.” Under the direction of a strong leadership team (which may include some professional advisors), the anesthesiology group should describe a specific vision for their practice, its strengths, profit goals and management style (perhaps in two years, or five years). Once the vision is clarified, the gap between “where we want to be” vs. “where we are” can be determined. This requires an objective assessment of the practice’s current standing (advisors’ can provide useful perspective here). To prepare for the negotiations, the anesthesiology group must assess itself both as an independent business, and as a group within the hospital. Finances, compensation rates, staff, hours, patient population, office efficiency and MD/CRNA ratio are all relevant but the perspective on these issues may vary differ between the practice and the hospital.  Understanding similarities and differences in assessments of the two (or more) parties is instrumental in developing a strategic plan to position the anesthesiology group and negotiate its standing in the hospital and in the overall market.  “Your group’s strategic plan—based on its mission, vision and values—should be the guiding force behind any organizational enterprise. “ Combining the strategic plan and the “Getting to Yes” philosophy will dramatically improve the practice’s odds of success during the formal negotiations.
While few anesthesiologists studied medicine to involve themselves in these “business side” issues, most would agree that they are central to success in today’s increasingly complex healthcare world. Many of the details, and even the negotiations, can be handled with professional advisors and other expert partners. But the potential of the practice will only be realized through the guiding force of one or more strong leaders. These leaders are the ones who help create the shared vision for the future in such a way that the practice unites behind the vision and takes day to day actions to achieve it. And they are the leaders who realize that saving lives is no longer enough—the “business side” is a critical requirement for success.
Roger Fisher, et al., Getting to Yes: Negotiating Agreement Without Giving In, (Penguin, December, 1991) 10-11
Susan Turney, MD, “To Market, To Market,” MGMA Connexion, Vol.6 Issue 6, July, 2006, p.1
