Equipping physicians to lead: principles for innovation.

The healthcare system in the United States has evolved rapidly in recent years, mainly in response to the economic pressures of the healthcare marketplace. The unparalleled American third-party payer system, the largest service economy in the world, is, for the first time, truly subject to classic forces of laissez faire economics (ie, capitalism). Outgrowths of this revolution include entities such as utilization review, contracting based on provider performance, and myriad cost-containment initiatives. Until recently as providers, we had the best of both worlds: the ability to set fee-for-service unencumbered by the laws of the marketplace; and a virtual guarantee of reimbursement, without regard to the necessity or quality of service. Clearly, the provider has historically dominated the system. In fact, during the 50 years after World War II, both providers and patients were almost entirely insulated from financial risk. Now, however, the advent of a true market economy has caused a major shift in power among the classic healthcare system entities: providers, patients, and third-party payers. Although some third-party payers, primarily the federal government and types of insurers, continue to compensate providers for their services, the underlying payers (large employers) are demanding that providers and patients also share the financial burden. Rather suddenly, it is these third parties that are positioned to assume a major degree of control over the delivery of healthcare. They will no longer tolerate unbridled growth in healthcare expense. The immediate consequence of these rapid changes is that physicians and patients alike are often disenchanted with the medical care delivered and received. The noble profession of medicine has been diminished as physicians have come to be viewed as “providers” in an industry where healthcare is in danger of becoming simply a commodity. The profession is finally subject to one of the major market forces set loose during the Industrial Revolution, that of the standardization of processes. The current emphasis on reduction in medical “errors,” which both the federal government and private industry believe can be achieved through a standardization approach (ie, a decrease in product variance), is but one manifestation of this market force. Most Americans still believe that the United States has the premier healthcare system in the world, but they also believe it doesn’t serve them as well as it should. Many people believe that physicians are greedy, that all hospitals are for-profits, and that the healthcare system is more interested in the bottom line than in patient care. Only through physician leadership that integrates our traditional core values with newer market values in such a way that the physician-patient relationship is our number one priority, can trust and confidence in our health system be restored. “In essence,” said James O’Toole, “the leadership challenge is to provide the glue to cohere independent units in a world characterized by forces of entropy and fragmentation. Only one element has been identified as powerful enough to overcome those centripetal forces, and that is trust. And recent experience shows that such trust emanates from leadership based on shared purpose, shared vision, and especially, shared values.” Obviously, the medical profession is at a crossroads. The overriding mission of most physicians is, and should be, to compassionately care for the ill. However, in order to succeed in this mission, we must now align ourselves with the realities of a radically changing healthcare system that is driven by financial considerations. When cost becomes the dominant outcome measure in patient care, our mission is in jeopardy. As in any service economy, eventually, value will become the dominant measure for both patients and payers; value is simply quality divided by cost. Increases in quality and decreases in cost both lead to increases in value (and vice versa). Only the physician, the focal point of the healthcare delivery system, can truly influence the value equation. Henry Kissinger once commented that, “History has no resting places; what does not advance, must sooner or later decline.” Rather than abdicate our traditional roles as leaders in healthcare provision, we, the physicians, need to acquire another vocabulary and its accompanying skill set, that of leadership and management competencies. With the advent of the healthcare delivery system as a market entity, patient care is a far more complex task than it was 50 years ago. For the concept of “managed” care (versus managed cost) to be truly operative, physicians must be able to integrate cost-containment principles and high standards of patient care (the quality component of value). Knowledge of managerial and financial strategies is needed to complement clinical training if superior patient care is Am J Surg. 2000;180:185–186. From the Department of Surgery (RWS), College of Medicine and Chancellor’s Office University of Kentucky Chandler Medical Center, and Clinical Operations, Veterans Administration Medical Center, Lexington, Kentucky, and the Department of Surgery (WWS), Penn State College of Medicine, The Milton S. Hershey Medical Center, Hershey, Pennsylvania. Requests for reprints should be addressed to Richard W. Schwartz, MD, Department of Surgery, Chandler Medical Center, University of Kentucky, Lexington, Kentucky 40536. Manuscript submitted May 15, 2000, and accepted in revised form July 15, 2000. PHYSICIAN LEADERSHIP