Feature of the Week

September 8, 2013 11:31 pm

Management lessons are just what the doctor ordered

Ferguson

Seismic demographic, political and economic shifts are demanding radical changes to global healthcare systems.

With administrators under pressure to cut costs, physicians being pushed to work more collaboratively and new technologies in need of commercialisation, the skills acquired on an MBA look increasingly relevant. For business schools able to offer the right courses, this is a big opportunity.

“Clearly you need skills in entrepreneurship, in how to be innovative and in how to scale something up in a cost-effective way,” says Regina Herzlinger, a Harvard Business School professor widely recognised for her healthcare research. “Those skills are not traditionally taught on healthcare administration courses – those are skills that business schools focus on.”

The need for business innovation in healthcare has never been so urgent. In Europe, cash-strapped governments with ageing populations are struggling to meet demand for increasing levels of care without pushing up spending. In response, the drive is for greater efficiency and collaboration between different practitioners and specialists. “The healthcare system is about much more than just treating patients,” says Steve Chick, head of the Healthcare Management Initiative at Insead, which runs executive programmes for practitioners and policy makers. “The co-ordination of care is critical and that’s where business schools can play a big role.’

In the UK the severe budgetary squeeze on the National Health Service at a time of increasing demand for healthcare means NHS leaders need to do more with less.

“The current decade ... is presenting those leading healthcare with the biggest challenges we’ve seen since the establishment of the NHS,” says Chris Ham, chief executive of the King’s Fund, a leading healthcare think-tank.

Meanwhile, emerging markets – many of which are still combating infectious diseases and infant mortality – face an additional burden in the rising incidence of conditions such as cancer and diabetes.

Perhaps the most radical changes are taking place in the US. Healthcare in the country – public and private – is now 17.9 per cent of GDP, against 9.3 per cent in the UK, according to data from the World Bank.

Sweeping reforms in the US under the Affordable Care Act are reshaping care delivery and health insurance. With costs rising and mergers creating supersized hospital groups, a once fragmented industry is increasingly made up of large networks requiring accomplished leaders.

“There will be more positions within those systems that will attract MBA talent and for which their skills are relevant,” says June Kinney, associate director for the MBA in Health Care Management at the University of Pennsylvania’s Wharton school.

The transformation of US healthcare systems is changing the kinds of candidates institutions are looking for, says Andrew Chastain, managing partner at Witt/Kieffer, an executive search firm focusing on healthcare. Consolidation and reforms are generating demand for executives skilled in operations, finance, supply chain management and IT.

Consolidation is also bringing to an end the days when senior healthcare executives were responsible for managing everything from operations to finance and strategy. “Those are getting sucked up to corporate, as you’d see in any market that starts to consolidate,” says Mr Chastain.

If positions for mainstream MBA graduates are growing in the healthcare sector, an increasing number of medical professionals are looking to pursue a health-focused MBA.

With its MBA Health Sector Management programme, The Fuqua School of Business at Duke University is among a number of schools offering MBAs – some run jointly with medical schools – designed for healthcare professionals. At Harvard Business School’s Health Initiative, an MBA caters to students from fields such as biotechnology, pharmaceuticals insurance and public health, and the school has several courses on entrepreneurship in healthcare. More recently, executive programmes have been emerging. Indiana University’s Kelley School of Business has just launched a two-year Business of Medicine MBA for practising physicians who are moving into leadership positions.

But if they are to keep up with the sector’s growing demand for management education, business schools will have to expand dramatically the number and type of programmes they offer healthcare professionals. This will not be easy. Given the highly specialised nature of healthcare and the range of professional roles it encompasses – from surgeons to insurance brokers – schools will find it tough to recruit faculty staff capable of teaching the necessary skills.

“The challenge for business schools is to take what they know and adapt it to healthcare,” says Prof Herzlinger. “What’s needed is a lot of specific knowledge.”

A cultural shift will also be required before the MBA becomes a degree to which doctors or health administrators naturally turn. In the US, healthcare management education is largely provided by schools of public health and healthcare administration, not business schools.

In the UK, says Mr Ham, relatively few healthcare leaders have opted for a business school course. “Historically, MBAs were not seen in the NHS as having value,” he explains.

Academics and policy makers believe this needs to change. And given the sector’s size (it is the biggest employer in some markets) and the challenges it faces, management education could play an important role in equipping the next generation of leaders and introducing new business models to healthcare systems.

“This is a huge opportunity for business schools,” says Prof Herzlinger. “There’s a serious mismatch between what the people who are changing healthcare need and the kind of education that’s being provided.”

 

School alliance to tackle healthcare issues

 

If business schools are to meet increasing demand for healthcare-focused management education, they will need to join forces. This is the thinking behind the Business School Alliance for Health Management, a non-profit consortium of leading US business schools. Members include Harvard Business School, Kellogg School of Management, the Wharton school at the University of Pennsylvania and the Yale School of Management.

To help address the shortfall in academics capable of teaching MBA programmes to healthcare professionals, BAHM is developing a teaching faculty network. It also runs doctoral student “webinars”.

The alliance has recently launched a journal, Healthcare Management, Policy and Innovation, intended to present research and ideas on improvements in management practices and public policy.

The journal fills an important gap, says Kevin Schulman, director of the health sector management programme at Duke University’s Fuqua School of Business, an alliance member.

“If you submit your papers to clinical journals, they say it’s too business-focused. If you submit them to business journals, they say it’s too healthcare-focused.”

Guiding BAHM’s activities is the idea that management education, when applied to healthcare delivery, can accelerate innovation. Prof Schulman says this means encouraging senior physicians and administrators to look at business processes and solutions outside their sector that could be applied to healthcare.

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