Climbing the Ladder to CEO, Part III: Following Your Own Path

This is the third of a five-part article series. Parts I, II, and III were originally published in The Physician Executive in 2006.

She’s a talented surgeon. He’s a great diagnostician. They should stick to what they do best; leave business matters to us.

Physician executives feel this negative bias as they venture into the business world. Larry Mathis, former Methodist Healthcare System CEO, brought it to the forefront in his book The Mathis Maxims: Lessons in Leadership, with one particular maxim: “Physician executive: an oxymoron.”(1)

An experienced physician executive says, “Physicians are viewed as technicians not healthcare business experts.” Is this an unfounded bias creating a barrier to career advancement? A “caducean ceiling?”

Eight experienced physician executives acknowledged in recent interviews that physicians encounter a negative bias when they enter the boardroom. However, they also agreed that the bias is sometimes accurate — many physicians are not qualified for top business roles.

To be a competitive CEO candidate, you must demonstrate proficiency in addressing an organization’s top challenges. A medical degree is not a prerequisite. Consider the three top challenges identified by hospital CEOs:

1. Financial viability

2. Personnel shortages

3. Care for the uninsured(2)

These are business matters. To be considered for a CEO position you must demonstrate that you are a proficient businessperson who happens to be a physician, not a proficient physician who happens to understand business. You will earn credentials and credibility through formal education and experience.

More specifically, experience is required in operations management, executing strategy at all organizational levels and managing the day-to-day business. This is a tough job. For non-physicians, the time required to work up through the rank-and-file to “CEO-qualified” is typically 15 years or longer.

For many physicians, this timeframe is impractical, as you have spent many years in medical school, residency, and clinical practice. Fortunately, there’s a valuable card physicians can play. Only physicians can be hired as a medical director or as the VPMA. This is an entree into a high-profile management job. Career progression from here can be difficult.

Finding Opportunity

Here’s a look at some of the advice the eight experienced physician executives shared about moving into the CEO office.

Just as the board is risk-averse in selecting a CEO, it is likely that your current CEO is risk-averse in assigning you accountability for large-scale operations. You must show that you are capable by demonstrating consistent performance in roles of increasing magnitude.

Can you quantify your accomplishments using metrics such as margin, volume, time, or statistics? When you can deliver results, people want you. If you can only provide a qualitative summary then you are at a significant disadvantage. Simply holding a title is woefully insufficient. Every time you embark on an initiative or establish annual goals, ask yourself in advance how you will measure success.

Avoid being pigeonholed in a stereotypical physician role. Look for opportunity outside the typical physician domain. Success is evident when the CFO comes to your office to discuss a business matter rather than to seek medical advice.

However, be cognizant that you are in a competitive environment. Every time you pursue opportunity outside your traditional role you may be taking that opportunity away from another aspiring non-physician executive. You need to pursue your goals, but be considerate and respectful, as you are dependent upon your peers.

Avoid career stagnation. In a best-case scenario, you will be given opportunity to grow within your home organization. Keep abreast of new organizational initiatives, evolving conflict, market changes, and executive resignations. When opportunities arise, ask to be considered. If opportunity does not arise or you are routinely turned down, look elsewhere.

The interviews revealed that the majority of accomplished physician executives relocated for opportunity — often more than once.

One executive, now managing a $200 million budget, departed an academic facility to enter private practice in a small hospital. Here he became a part-time VPMA. Realizing lack of growth opportunity, he moved to a large inner-city health system for a full-time VPMA position. This position provided ample personal growth opportunity, which led to his current job as senior vice president of operations in a mid-size suburban community hospital — three moves.

Several search consultants say that many physicians limit their potential because they tend to be risk-adverse and unwilling to move. This is not true of non-physician executives, who expect to move for career opportunity.

Critical Success Factors

The physician executives interviewed agreed that leadership is the number one success factor for CEOs. In operations management, being an independent performer is a death sentence. A good leader has the ability to assemble, motivate, support, and depend upon teams. You must demonstrate purpose, passion, and respect, and must develop trust by conducting yourself with fairness, integrity, and consistency. You will be judged by results, which will be delivered by your teams.

Listen and learn. You cannot possibly know everything there is about complex operations. Listen to your employees, especially the frontline workers. Get out of the office and get to know them. Allow them to be your mentors.

You will make mistakes. Take accountability, seek advice from peers, bosses, and consultants. One very accomplished executive said that six months after becoming a COO a peer told him that he was not doing his job! “I was a mediocre COO,” he admits, “thankfully I listened and worked on what I needed to do.”

Know that this is what you want to do. You will need drive and determination to succeed. Operations management is all about applying business principles, holding people accountable (including yourself), and delivering results.

You can’t worry about being popular or you will never reach your potential. You will need to weather extreme ups and downs, manage change, make deadlines, and confront tough issues. You must be able to make hard decisions despite incomplete information. You can always redirect; however, no decision equates to no results.

Develop and refine your negotiation and relationship skills. Many managers have failed due to their inability to gain the respect of peers and subordinates. Forming highly effective teams requires that you recruit and retain talent. A poor relationship with an immediate supervisor is the number one reason for turnover. A quick transition from autonomous, decision-making, self-reliant physician to team player is mandatory. Good people want to be empowered, not managed.

One physician executive learned this lesson during his MBA program. He tried to control his study group. This wasn’t working too well so he had no choice but to let go and allow himself to be dependent upon others. To his surprise it worked out well. “It changed me as a person,” he recalled.

The ability to work effectively with others goes beyond your immediate team. Success requires support from your supervisor, board, peers, medical staff, vendors, and consultants.

Most entry level physician executives have few direct reports but are still accountable for results. Consider this a great opportunity to hone your negotiation and relationship skills as you work with multidisciplinary teams. The lack of authority and direct reports is an unacceptable excuse for poor performance. Realize this and you will be much more effective in the long-term.

Compensation Management

Managing your compensation during career transitions can be tricky. A common physician expectation is that the medical degree confers a certain level of compensation guarantee. This is certainly true of “MD/DO-required” jobs, such as medical director or VPMA/CMO. However, there comes a point at which your physician credentials are no longer relevant.

Consider a CMO transitioning to a COO role. In mid-sized hospitals, market compensation for the CMO usually exceeds that of the COO. Additionally, you do not need an MD degree to be a COO. Prepare for a significant pay cut unless your organization is willing to take into account your previous salary and pay a premium.

Compensation practices may appear to be counterintuitive. Assume you are a CMO in pursuit of operations experience. You are granted responsibility for laboratory services. Should you request more money for the additional responsibility?

Be careful. There are several other vice presidents who would gladly take on this operation without any expectation of increased compensation simply as a career builder, and they are frequently paid less than you!

Expect to work harder for the same pay. At some point, you may actually be performing more than one job. Most organizations follow a “market-based” philosophy. The rule of thumb is that you will be paid for the job that is more highly valued. Depending on the magnitude of your second role you may be able to negotiate an additional premium, but do not count on it. And do not even ask until you demonstrate that you can do the job — just say “thank you for the opportunity.”

One other point: larger organizations typically have higher management pay scales. Several physician executives maintained their salary level by transitioning from a CMO role in a smaller organization to an operations role in a larger organization.

The majority of physician executives interviewed for this series were primary care specialists. Management compensation is more commensurate with that of a primary care physician. Procedure-oriented specialists will most likely be required to accept lower compensation in the transition from clinical practice to management.

In the end, you must discard the notion of the “caducean ceiling.” It connotes a victim’s mentality not worthy of a leader. Instead, know what you want to do, plan your career, and earn your credentials. Follow your own path — then lead others.

References

1. Mathis, L. The Mathis Maxim: Lessons in Leadership. Houston: Leadership Press, 2001.

2. Evans, M. “What Really Matters Most.” Modern Healthcare. 36(2):8–9.

ACKNOWLEDGMENTS

Special thanks to the following senior physician executives who gave their time and provided insights to help shape this article:

Sherif Abdou MD, MMM, FACPE, CPE, president and CEO, Pinnacle Health System, Las Vegas, Nevada

Jeff Ackerman, MD, president and CEO, San Jacinto Methodist Hospital, Baytown, Texas

Ronald Goodspeed, MD, MPH, FACP, FACPE, president and CEO, Southcoast Hospitals Group, Fall River, Massachusetts

Martin Hickey, MD, MS, CPE, FACPE, senior vice president for health care affairs, Excellus Blue Cross Blue Shield, Rochester, New York

Matthew Lambert, MD, senior vice president for clinical operations, Elmhurst Hospital, Elmhurst, Illinois

Paul Liss, MD, MS, CPE, chief medical officer, Marshfield Clinic, Marshfield, Wisconsin

Terry Pladson, MD, MBA, CPE, FACPE, CEO, CentraCare Health System, St. Cloud, Minnesota

Craig Samitt, MD, MBA, COO, Fallon Clinic, Worchester, Massachusetts