The Business of Medicine

We all have stories of working with physicians who had basically no idea about business.  It always seemed like they just wanted to ignore the money part and just keep seeing patients.  They would complain that they weren’t trained for the financial work.  It always struck me as odd that physicians, who were running businesses with annual cash flows that could be seven figures, would pay so little attention to the financials.

I have never heard a physician talk about their annual planning process, marketing plans or even the performance appraisals they do for those who work in their office.  It always seemed to me that they were barely keeping their heads above water dealing with medical records, refill prescription requests and phone messages.

In so many ways, I could see how these physicians were being taken advantage of by all the other players in healthcare.  The managed care organizations told them how much they could make per patient visit.  They made the physician sign complex contracts if they wanted to continue working with the largest plans in their areas.  Hospitals, back when PCPs went to hospitals, were constantly complaining about their census, policy issues and patient records that were not up to date.  The government was also a constant threat as the fees they paid really determined the level of income the physician had most years and it seemed that these fees were always part of political hostage-taking situations.

This trend seems to now be going in a different direction.  Physicians are recognizing that they are “the talent” and they are doing things to control their own destiny.  So much of this might be driven by the Affordable Care Act (ACA) and the much discussed Accountable Care Organizations (ACOs) that the act established.  A recent report in American Medical News notes that of the 27 recently CMS approved ACOs, 21 of these are being led by physicians.  It is also worth noting in the article that despite all the negative predictions on ACOs, they now seem to be getting off to a fabulous start.  One might argue that it was when physicians recognized that they could, through their medical knowledge, really make a difference in the economics of healthcare AND share in the financial success, that the ACO concept really started to gain momentum.

It is not a coincidence that a second article last week talked about the significant rise in dual degree medical students.  There is a huge trend, perhaps spurred by healthcare reform, where medical students are also getting PhD, MBA, JD or MPH degrees that will all help move the physicians beyond the “old way” of practicing medicine.  These medical students are  super training themselves to be able to design and execute significant strategy to both improve the overall health system and to control their own financial destiny.

So what does that mean to us in the pharmaceutical industry?  What are we doing differently to prepare to work with these new medical/business leaders?  Has our training accelerated at the same pace as that of our physician customers?  Have all our people evolved to to stay up with the physicians?  Are we still designing the same type of visual aids as we did for the physician of yesterday?  Are our sales calls truly set up to explain the financial impact of the products to the overall system?  Do we treat physicians as the CEOs of major corporations or the presidents of insurance companies?  How much market research is spent trying to really understand the business needs of the physician?  I would think a lot of work may be needed.

This trend where physicians are taking more charge of the business of medicine is quite interesting.  It may be one of the critical game changers that could help save our healthcare system.  Obviously, they can’t do this alone and will need trusted partners to help with their work.  Our industry, that has worked so closely with physicians over the years, seems ideally suited to be one of these partners.  The key is we need to work with the physicians towards shared goals that benefit everyone.  The business of medicine is becoming so much more exciting.

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