The New Normal: Business Education for Medical Students and Practicing Physicians

The field of medicine and healthcare is dynamic and is constantly changing. In the wake of COVID-19, we have seen the healthcare industry forced into many changes nearly overnight, in the areas of public health, finance, regulations, administration, reimbursement, and the delivery of medical care. Based on the rapid changes the industry constantly faces, most of what students learn in medical school will be outdated five years after they graduate. As future physicians, medical students must learn to adapt to these changes as well as the regulations which control and govern the field of medicine, including the healthcare industry. In fact, the medical school curriculum itself has evolved greatly over the years. In addition to basic science, pharmacology, and clinical medicine, the curriculum now includes content on biostatistics, epidemiology, and health systems.(1) Doctors should be knowledgeable regarding all these content areas, because they inform their practice and ultimately help patients. However, there is one topic that often is neglected in medical education: the business of medicine.

Ultimately, patient care is at the center of medicine and is the main reason many physicians chose to go into the field. A good understanding of the business side of medicine and personal finance can help future physicians focus on just that area. There are a number of ways to begin to integrate these topics into medical education. Clear benefits come with learning these skills, and many students are eager to do so. When more medical schools integrate these subjects into their curriculums, students who are given the opportunity to gain this knowledge and can become more well-rounded physicians as a result.

The Evolving Healthcare Environment

Historical data reveal that the United States consistently spends more on healthcare than most other advanced countries. As a percentage of GDP, U.S. healthcare spending has risen from just 9% in 1980 to 18% in 2020.(2) Despite attempts to curb costs, recent data show that healthcare spending continues to climb. The rate of U.S. healthcare spending rose by 4.7% in 2018, then by 4.6% in 2019, to reach a total of $3.8 trillion in expenditures.(3) Moreover, CMS projects that our national health spending will grow at an average annual rate of 5.4% during the period of 2019 to 2028, to reach $6.2 trillion in expenditures in 2028, a staggering 19.7% of GDP.(3) Whereas U.S. healthcare spending continues to expand, U.S. health outcomes have not improved to the same degree. Before the Affordable Care Act, the United States had the lowest life expectancy at birth, the highest infant mortality rate, the highest mortality rate for ischemic heart disease, high rates of adverse outcomes from diabetes, and the least amount of spending on social services compared to other member nations of the Organisation for Economic Co-operation and Development (OECD).(4) Although spending has continued to increase since 2013, the United States has continued to fare poorly on health outcome measures. The United States claimed the lowest life expectancy of all countries in the OECD, and an obesity rate two times higher than the OECD average. The United States also had the highest chronic disease burden, the most hospitalizations from preventable causes, and the highest rate of avoidable deaths in 2018 and 2019 compared with OECD members.(3) This evidence exposes our healthcare spending crisis and illustrates the necessity of systemic reform to our healthcare system.

The concept of value-based care was developed to attempt to improve our poor health outcomes and control healthcare spending. The goal was to improve outcomes while reducing costs by shifting the goal of care from quantity of patients seen to the quality of care patients received and providing incentives to encourage healthcare practices to make this shift.

Although improvements in quality of care have been shown to improve patient outcomes, adapting to the value-based care movement requires restructuring our entire healthcare system.

In 2001, the Institute of Medicine detailed six aims for reform of our healthcare system, with a goal of providing care that was safe, effective, patient centered, timely, efficient, and equitable.(5) Improving quality of care on these measures requires improvement across the entire continuum of care, encompassing the full patient experience. The Agency for Healthcare Research and Quality defines patient experience as “the range of interactions that patients have with the healthcare system, including their care from health plans, and from doctors, nurses, and staff in hospitals, physician practices, and other healthcare facilities.”(6) The Consumer Assessment of Healthcare Providers and Systems (CAHPS) program, launched in 1995 but first used in 2006, assesses aspects of the patient experience as a standardized way to measure and report quality. The survey has become a widespread program incorporated into a variety of clinical settings and ties quality to reimbursement under the Hospital Value-based Purchasing Program.(7) To further incentivize healthcare providers to emphasize quality, the Medicare Access and CHIP Reauthorization Act (MACRA), signed into law in 2015, created the CMS’s Quality Payment Program. This program aims to change the behavior of physicians by rewarding physicians for value over volume. Medicare reimbursement is tied to physicians’ performance, and quality measures make up a significant portion of the performance scores.(7)

Although improvements in quality of care have been shown to improve patient outcomes, adapting to the value-based care movement requires restructuring our entire healthcare system. Business models, cost structures, management strategies, and infrastructure, including IT systems, must be updated.(8) Efficiency and safety must be enhanced, and measures of quality must be continually assessed and used to create initiatives for quality improvement projects. Coordination of care across the continuum should be well organized and easy to navigate with the incorporation of telemedicine. Administrators and private practice owners must understand how to motivate their staff to align with the value-based care movement, or transition will be difficult and ineffective. Every aspect of care must be evaluated to determine whether it adds value.(8)

High-quality care is increasingly important to executives of healthcare organizations, because quality measures now are correlated with monetary gain and, therefore, the survival of an organization. Furthermore, the Internet and social media have made hospital and provider quality scores easily accessible, so value-based care is crucial in attracting and retaining customers. Accordingly, healthcare administrators are under pressure from executives to improve quality and the patient experience. This pressure is then placed on physicians and staff. New hospital policies may be created that physicians disagree with, especially if they do not take part in their creation. Without the knowledge they need to navigate the administrative environment, physicians may be left powerless against burdensome policies and feel their practice autonomy is reduced. Enacting successful quality improvement projects also may be difficult if one does not understand organizational dynamics, management skills, or how to effectively communicate with an interdepartmental team.(9)

Although Medicare reimbursement for physicians initially was structured as fee-for-service, over time CMS payment models were modified to incentivize value-based care. The Omnibus Budget Reconciliation Act of 1989 created the Medicare Economic Index, which assigned relative value units (RVUs) to Current Procedural Terminology (CPT) codes. This program introduced the concept of budget neutrality. Under this model, physicians were rewarded for resources used, and healthcare spending continued to increase.(10)

To attempt to control spending, the Sustainable Growth Rate (SGR) payment system was introduced via the Balanced Budget Act in 1997. This reimbursement model compared growth of Medicare expenditure to U.S. GDP growth annually and set a conversion factor based on target goals. This conversion factor was then used as a multiplier to RVUs to determine reimbursement rates for services. The SGR method aimed to control spending by creating fixed annual budgets so the increase in Medicare expenditure would not exceed GDP growth. The fee-for-service– based Medicare Economic Index and SGR methods both failed to control spending, however. From 1970 to 2013 healthcare spending grew from $385 to $12,210 per Medicare beneficiary.(10)

To shift focus from volume to value, CMS later introduced the Physician Feedback Program/Value-Based Payment Modifier program under the Medicare Improvements for Patients and Providers Act of 2008. The Value Modifier program adjusted payments by comparing the value of care given to the cost of that care. Payments were adjusted under this program from 2015 to 2017 based on quality data from 2013 to 2015.(7)

Following the Value Modifier program, CMS’s Quality Payment Program repealed the SGR formula when MACRA was signed in 2015. This two-track reimbursement model adjusts payments via the Merit-based Incentive Payment System (MIPS) or alternative payment models that both incentivize high-quality, cost-efficient care. These pathways reward physicians for high-quality care and provide bonuses if physicians meet performance standards.(7)

Hospitals were reimbursed on a different schedule from physicians. Medicare established diagnosis-related groups in 1983 that reimbursed hospitals at a flat fee based on a patient’s diagnosis. Compensation also was given for length of stay and additional services consumed. Under this payment structure, hospital reimbursement often was much lower than actual cost. In 2013, the Hospital Value-Based Purchasing Program began, offering incentives to hospitals to provide high-quality care. Hospitals are evaluated on quality measures, including Hospital CAHPS (HCAHPS) scores, and penalized for scores that do not meet target goals.(7)

Providers must have a good understanding of the components of reimbursement models, how to improve quality scores, and how to bill correctly to maximize payments.

As a result of the Medicare reimbursement models that aimed for budget neutrality, costs of services continually outweighed economic growth.(10) Consequently, Medicare reimbursement to physicians and hospitals declined as CMS recalculated the Medicare Physician Fee Schedule and conversion factor.(7) Although private insurance may assist in making up the deficit, private insurance reimbursement also declined, because insurers often based their payments on a percentage of Medicare reimbursements.(10) Value-based reimbursement models aim to improve reimbursement while controlling cost but have their own set of considerations. These new models shift financial risk away from patients toward providers. Thus, providers must have a good understanding of the components of reimbursement models, how to improve quality scores, and how to bill correctly to maximize payments.(8)

With evolving reimbursement models come new rules and procedures for medical practice, documentation, and billing. Keeping up with these policies is difficult enough, but when increasing government regulations and the legislative environment of medicine are added on, it becomes extremely complex.

The False Claims Act states that making fraudulent claims for payment to Medicare and Medicaid is illegal, even if the act is unintentional. The Anti-Kickback Statute prohibits physicians from offering or receiving any kind of monetary or non-monetary reward to influence referrals to or from a healthcare entity. The Beneficiary Inducement Statute prohibits physicians from influencing Medicare and Medicaid beneficiaries to use their services by providing compensation. The Physician Self-Referral Law, best known as the Stark Law, dictates that physicians cannot refer patients to a healthcare entity from which that physician receives financial compensation. The exclusion statute and civil monetary penalties law deals with penalties for violation of regulations or misconduct. Finally, HIPAA aims to ensure that patients’ health information remains private and dictates how to protect it.(11)

Organizations also must follow several safety regulations. For those who manage their healthcare organization or private practice, these add another layer of complexity. The Clinical Laboratory Improvement Amendments established standards for laboratory testing and methods for monitoring their quality. Health and safety standards, including guidelines for dealing with bloodborne pathogens and waste removal, are covered under the Occupational Safety and Health Act.(11) This list is not exhaustive, and it continues to grow as CMS and other healthcare agencies create new legislation.

Although the aim of these policies is to protect patients, physicians may feel increasingly burdened by the many policies and coding regulations they must comply with. The medical school curriculum at most medical schools does not cover medical law, so navigating these regulations to successfully avoid legal and financial consequences can be difficult. Those managing a healthcare organization must have an even more comprehensive knowledge of medical law to avoid shutdown. Ignorance of these policies and errors made unintentionally due to this ignorance do not exempt physicians from the consequences. Furthermore, this highly regulated environment of healthcare may impair physicians’ practice autonomy. When physicians are not equipped with knowledge on how to create and change policy, they may feel powerless in the face of policies that they feel are ineffective or oppressive.

As with many industries, the use of technology and analytics has become widespread in healthcare. EHRs are widely used, and we have seen the rise of telemedicine, online health portals, and devices to self-record personal health data and administer medicine. An overwhelming amount of health data has been generated on a patient and population level. Genetic data can be used for personalized medicine, including creation of new drug targets and more effective cancer treatments. Survey data, such as CAHPS, can be analyzed to determine deficiencies in care and used to create quality improvement and business initiatives. The use of software for billing, coordination of care, operations, telehealth, and customer relationship management has become pervasive.

Although integration of IT and analytics into healthcare can reduce workload and improve patient care, most physicians without business training do not learn about the many benefits that technology and analytics provide. Accordingly, physicians may see the increasing use of technology as a burden, not as a resource. The healthcare industry lags behind other industries in their use of technology, so physicians need to become advocates of its use in order to untap its potential.(12) Those in private practice should understand the different types of software available to them and be able to navigate choosing a system that is right for their needs. The large amount of healthcare data generated needs to be mined to inform decisions and drive medical advancements. Analytics, including machine learning and artificial intelligence, can be used to improve safety and automate tasks, reducing administrative burden. Endless opportunities are available to integrate technology in every aspect of healthcare, and physicians who understand and advocate for its use will pave the way for medical innovation.

Over the past few decades, medical malpractice litigation has become increasingly prevalent.(13) For fear of litigation, some physicians practice defensive medicine, where physicians order unnecessary tests. Over-testing further worsens healthcare spending and accounts for 3%—or roughly $50 billion—of healthcare spending annually.(13) Additionally, some physicians avoid treating certain high-risk patients or using high-risk procedures to reduce the chance of litigation. In obstetrics and gynecology, for example, physicians have avoided high-risk patients, favored cesarean deliveries, and decreased attempts for trial of labor after cesarean.(14) Physicians also now spend more time on documentation to protect themselves in case they end up in court, reducing their time available to be spent with patients.

Malpractice insurance premiums have risen to cover the increased amount of malpractice litigation. The steadily rising rates have made it difficult for physicians to be self-employed, leading some in private practice to seek out acquisition by larger healthcare organizations to cover costs. Furthermore, high insurance premiums have reduced the supply of physicians, as some leave medicine entirely. To try to reduce insurance premiums and curb the practice of defensive medicine, various state-level medical malpractice tort reforms have been enacted. These take the form of direct reforms, including damage caps and removing punitive damages, and indirect reforms, such as reforming statutes of limitation or joint and several liability rule.(13) Despite small improvements, defensive medicine and high insurance premiums continue to persist, necessitating innovation in medical malpractice tort reform on a system-wide level.

The evolving healthcare environment has influenced the structure of healthcare organizations in many ways. Historically, physician practices were arranged as sole proprietorships or small groups. In 1969, the IRS allowed the formation of professional organizations into corporations, paving the way for development of large-scale healthcare organizations.(1) As reimbursement declined, the administrative burden on physicians grew, malpractice insurance premiums rose, expensive software for EHRs was required, and competition from mergers increased, physician practices had to adapt. Groups consolidated, and corporate entities became more common. Physicians took on salaried positions at hospitals, contractually based physician-hospital organizations appeared, and, recently, accountable care organizations where risk is shared emerged.(15)

In an age where ratings and quality scores are easily accessible, providing good customer service in addition to safe and effective treatment is increasingly important.

Physicians may wish to maintain their autonomy or reduce the economic and regulatory pressure placed on them by remaining independent of healthcare corporations. The corporate practice of medicine occurs when for-profit businesses dictate the way physicians can practice. The corporation becomes too focused on earning a profit and may not run the organization to the same ethical and professional standards as physicians. Physicians who want to remain independent and avoid the corporate practice of medicine must understand how to successfully run a business in our current healthcare environment. For those who will be salaried or contracted by larger organizations, negotiation skills are vital to avoid being taken advantage of.

For physicians who own their practice and seek to increase their practice size to create an economy of scale, knowledge of business practice is essential. The various types of corporate entities that a practice might transition into have their own sets of risks and benefits, including legal and tax considerations. Compared with smaller private practices, larger entities are more organizationally complex. They require a different set of managerial skills and require the financial knowledge to fund supporting infrastructure and corporate investments.(16) Growing and maintaining a practice requires marketing skills as well to compete against the many options available to patients for care.

Competition in the healthcare industry also has undergone a transformation because of the increase in consumer choice in obtaining care. In 1995, managed care largely influenced the healthcare market. Provider networks were selective, HMOs dictated which hospitals or providers consumers could use, and insurance plans directed patients to a hospital or provider. The late 1990s saw backlash against managed care as patients were restricted in getting the medical care they required due to denials by HMOs. Physicians also viewed managed care negatively because of payment rate reductions and restrictions on the care they could provide. Employers finally loosened restrictions on managed care and widened provider networks. In the early 2000s, consumer-driven healthcare was introduced, in which patients became more actively involved in their care. Patients could shop among providers and organizations and were offered financial incentives to choose providers who practiced more efficiently. This increase in consumer choice intensified rivalry among healthcare professionals and organizations as competition for customers increased.(17)

Physicians, residents, and medical students generally have poor financial literacy and are not adequately educated on how to manage their debt or personal finances.

In an age where ratings and quality scores are easily accessible, providing good customer service in addition to safe and effective treatment is increasingly important. Patients can now choose between providers based on publicly displayed data and word of mouth. Providing high-quality care is vital, then, for attracting and retaining customers and the survival of the healthcare organization. Those who run a healthcare organization must improve their patient experience to provide high-value care. Marketing skills also are essential to successfully compete against other organizations, especially when competing against large healthcare corporations that hold a larger portion of the market share.

Rising Medical School Cost Without Adequate Physician Financial Literacy

Another issue facing young physicians today is the skyrocketing cost of medical school without adequate financial literacy to manage high debt. In 1978, average medical school debt, adjusted for inflation, was just $53,600. In 1998 and 2008 it rose to $135,400 and $186,000, respectively. Finally, in 2018, average medical school debt jumped to roughly $215,900. By the time physicians finish paying off their loans plus interest, the average physician pays $365,000-440,000.(18)

Although medical school debt has risen over 177.7% in the last 15 years, medical schools rarely include finance courses in their core curriculum. Physicians, residents, and medical students generally have poor financial literacy and are not adequately educated on how to manage their debt or personal finances. Without financial training, financial stressors and debt can contribute to physician burnout. Physicians with higher educational debt have reported worse quality of life and less satisfaction with work–life balance.(19)

Consequences from Lack of Training in the Business of Medicine

Medical schools and residencies do not traditionally prepare their students in the business side of medicine that is necessary for their success in the field. We operate in a healthcare environment that is constantly experiencing rapid changes stemming from healthcare policies, laws, reimbursement models, technology, and much more. This evolving healthcare environment continues to be affected by the following factors:

• Rising healthcare spending without corresponding improvement in outcomes;

• Increased focus or shift toward quality and the patient experience using the value-based care model for reimbursement;

• Evolving payment models and declining reimbursement;

• Increasing government regulations;

• Increasing use of technology, data, and analytics;

• Increasing medical malpractice;

• Litigation and defensive medicine and rising malpractice premiums;

• Evolving models and structure of healthcare organizations;

• Shift from private practice to corporate entities and large-scale practices;

• Increasing competition between physicians and organizations; and

• Rising medical school cost without adequate physician financial literacy.

The changes brought on by the evolving healthcare environment have led to challenges and problems for physicians who have inadequate business training as it relates to medicine. Kim(14)emphasizes that most medical schools and residency programs do not adequately prepare graduates for the practice management issues they are likely to face in private practice or in a salaried employment model. “Students are graduating with holes in their knowledge around contract negotiation, conflict resolution, or change management. As a result, these young physicians are entering the healthcare system and struggling to answer complex questions such as “How do you improve clinical workflow to enhance productivity?” and “How do you critically evaluate the financial performance of a private practice to determine where to make changes that will improve the overall effectiveness of the practice?”(19) Most medical students are fairly insulated from business elements surrounding billing, reimbursement, and the risks associated with medical malpractice. Some medical students may have a better grasp of practice management because they may have been exposed to these issues prior to medical school. However, these areas continue to evolve in the wake of debates and discussions surrounding healthcare reform, accountable care organizations, and physician payment models.

In addition to these challenges new graduate physicians face based on their lack of training in the business side of medicine, the following consequences also are emerging:

• Frustration, burnout, and poor career satisfaction for physicians;

• Difficulty finding and hiring clinical department chairs and administration;

• Physicians who are naïve about business being taken advantage of; and

• Difficulty implementing changes in their organization and the lack of knowledge to be an entrepreneur and innovator in medicine.

According to Mudge-Ridley,(20) research has found that fewer than half of graduating medical students in the United States receives adequate training to understand the healthcare system strategic approach and the economics of practicing medicine. Medical student and resident education must include instruction on how healthcare systems function —especially with the advent of complicated national healthcare reforms. Because of the changes to the healthcare environment and the issues it has created, it has become necessary for physicians to have business training.

Current Business Training in Medical Schools

The basic structure of U.S. medical education has hardly changed in the past 100 years. In the 21st century, however, doctors must navigate a dizzying array of high technology, new regulations, and shifting patient expectations. How can medical schools better prepare the physicians of tomorrow? As the healthcare market changes, so do the skills physicians need to best practice medicine and serve their patients. Medical education is in an era of transformation, and medical schools are beginning to innovate to prepare new physicians for the emerging new model of care. Findings from the Deloitte Center for Health Solutions’ surveys of physicians, healthcare consumers, and health system CEOs show that physicians’ expectations are changing.(21) The analysis found that:

• Hospital CEOs report needing more innovative leaders and clinicians, as well as employees with technology and data analytics skills.

• Consumers increasingly expect to partner with doctors instead of relying passively on them to make treatment decisions.

• Physicians reported anticipating that approximately 50% of their total compensation will be paid through value-based payment models in the next 10 years and that they expect to need new skills in business, health IT, and communication to practice effective value-based care.

Together, these findings suggest that an evolving market environment is demanding new competencies: business acumen; data analytic skills; and broadened interpersonal relationship skills, including enhanced communication and leadership skills. Medical schools are anticipating these new demands and beginning to change the content of their curricula and how they teach medical students. By teaching medical students more about the healthcare system, further integrating technology into the practice of medicine, and helping physicians learn the leadership and communication skills required to effectively connect with patients and team members, medical schools can improve quality of care while also improving the experience of receiving care. Physicians who lack a fundamental understanding of business and managerial principles usually cannot collaborate effectively with nonphysician managers. Those with advanced education, such as a Master of Business Administration (MBA) degree or similar training, are among the most effective healthcare leaders. Their involvement ultimately can improve patient outcomes.(22) The lack of exposure in medical school to topics traditionally taught in business, hospital administration, or public health schools is an impediment to developing skilled physician administrators.(23) A primary reason is that medical schools must incorporate an ever-growing body of basic and clinical information into limited space within their curricula; some educators believe there simply is not time to include topics outside of basic science and clinical medicine. To circumvent these limitations, many schools offer dual-degree programs such as MD/MBA.

Benefits of Business Education

As the healthcare industry continues to shift to a value-based format it is imperative that young doctors and medical students gain knowledge in business functions and business strategies. The consolidation of healthcare entities to survive and succeed has added to this need. The days of one- and two-doctor medical practices are coming to an end in urban and some rural areas. In their place are highly evolved medical group practices, hospital systems, and other new models. These changes are driving the need for business for the new generation of doctors.

Medical and management training don’t need to be mutually exclusive. Physicians can better help the patient and at the same time still be cognizant of cost and efficiency issues.”(24) Medicine involves leadership. Nearly all physicians take on significant leadership responsibilities over the course of their careers, but unlike any other occupation where management skills are important, physicians are neither taught how to lead nor are they typically rewarded for good leadership. Even though medical institutions have designated leadership as a core medical competency, leadership skills rarely are taught and reinforced across the continuum of medical training. As more evidence shows that leadership skills and management practices positively influence both patient and healthcare organization outcomes, it is becoming clear that leadership training should be formally integrated into medical and residency training curricula.”(25)

Physicians with business training are more conscious of the changing healthcare environment and are better able to enact change in healthcare on a system-wide level.

Physicians with business training are more conscious of the changing healthcare environment and are better able to enact change in healthcare on a system-wide level. As previously stated, our healthcare system has seen rising costs without corresponding improvement in outcomes and needs reform. Despite change in focus to quality over quantity and associated legislation/change in reimbursement models, our system still needs improvement.

The first step in making changes is being knowledgeable about the changing healthcare environment/public health in order to understand current issues in and where further improvements need to be made. Business training allows physicians to be more aware of current healthcare environment. In a survey of physicians who completed an MD/MBA degree, Sherrill(26) reported that “Both survey responses and interview feedback support the hypothesis that dual-degree students are very conscious of the changing nature of the medical care system and the need to transform physician roles.”

According to Keogh,(27) over 50% of graduates reported that the improved problem-solving and decision-making skills they had learned gave them confidence in addressing public health issues. Hall discovered that MD/MBA graduates had a better understanding of how to appropriately evaluate and implement data findings and study design to population health problems, with particular emphasis on addressing issues of access to care, quality and cost.(28)

Physicians with business training will understand how to adapt their organization in the setting of larger-scale healthcare organizations, increased competition, and focus on value-based care.

Organizations must adapt to the changing healthcare market, including increasing practice size, competition, and shift in practice model, to focus on value-based care. For practices and organizations undergoing an increase in practice size or a transition into a corporation with greater organizational complexity, physicians need skills in management. Physicians who are business trained acquire the necessary skills to make the transition in their organizational structure and run the new organization successfully. These skills include financial knowledge on cost structure and budgeting, management skills, leadership, and how to address medical malpractice.(29,30)

Business training also allows physicians to understand how to successfully restructure an organization to align with the value-based-care model. They will be able to provide greater coordination of care through incorporation of new IT systems and infrastructure, management of multidisciplinary teams, creation of new business models, evaluation of cost structure, and creation of quality.

To address increased competition, business training teaches strategy and marketing that helps physicians and organizations strategically compete. This education also teaches the dual-degreed physicians how to create a value proposition that will differentiate their practice and skill sets from other competing practices.(29,30)

Graduate business programs also may incorporate IT courses. Physicians with business training will understand the value of IT and analytics and can incorporate them into their practices. The healthcare industry lags behind other industries in use of technology, creating significant potential for incorporation of IT. IT courses may open up physicians’ perspectives on the value and benefits of incorporating technology, analytics, deep learning, and artificial intelligence rather than seeing technology as a burden.(12)

Remote monitoring of patients with chronic illnesses to avoid acute episodes can greatly assist physicians in managing patients and balancing their clinical workload. Data and analytics can transform discovery and innovation.

Business training will increase financial literacy by introducing the physician to financial principles, including personal and corporate finance. Surveys of those who completed MBA training showed that physicians acquired an understanding of financial principles,(29,30) rendering them better equipped to manage small practices or large clinical organizations.

Another concern of young physicians going into practice is how to manage their personal finances. Dual-degree–educated physicians are better equipped to manage personal finances, prepare for retirement, and manage personal debt effectively. Better personal management and reduction of debt is associated with increased quality of life and satisfaction with work–life balance.(19)

A critically important benefit of graduate business education is creating physicians who are better equipped to take on leadership roles in healthcare organizations, such as administrative executive roles and clinical directorships. One survey reports that physicians with business training had increased leadership skills: “40% to 50% of respondents reported leadership as a key skill gained from the MBA training.”(31) Another survey showed those with business training acquired financial knowledge, operational ability, and negotiation skills.(29,30) Without this knowledge, transition from clinical to administrative roles is challenging, because business and medically trained professionals have different goals, perspectives, and vocabulary. Business training makes the transition to the leadership roles smoother as physicians do not have to learn management skills on the job.

Physicians with business training demonstrate more effective communication with non-physician managers. To succeed in clinical and leadership roles while effectively navigating today’s culturally diverse environment, effective communication skills are critical. Patel et al.(31) reported that the “MBA/MD allowed for improved communication between disciplines, informed business perspective and provided multidisciplinary experience.”

Physicians with a business education are in a perfect position to lead an organization while ensuring high-quality care for patients.

Medical students with MBA training showed higher tolerance of ambiguity than traditional medical students, a trait that the authors associated with leadership ability.(26) In a survey of those who were business trained, Sherrill(26) found that “dual-degree students expressed little doubt in their clinical or administrative abilities and were significantly more confident than were their medical student counterparts.”

Physicians with a business education are in a perfect position to lead an organization while ensuring high-quality care for patients. Studies have found that hospitals with a physician as CEO were associated with higher quality rankings compared with hospitals where the CEO was not a physician.(32)

The American Medical Association(33) found that one of the most important determinants of physician professional satisfaction was physicians’ perceptions of quality of care, observing that “When physicians perceived themselves as providing high-quality care or their practices delivery of such care, they reported better professional satisfaction.” Physicians with business training are better able to implement quality improvement projects because they are equipped with the tools to effectively change issues and policies that hinder high-quality care, ultimately leading to greater career satisfaction.

Disadvantages versus Advantages of Business Training

Disadvantages

Although the many benefits of obtaining business training as a physician are evident, we also must consider the possible disadvantages of obtaining this training. First, the time required to complete the training may be a concern. Some dual MD/MBA programs take five years to complete, requiring medical students to start residency one year later than their peers. This may result in a year of lost salary for physicians, which can be difficult when they already are graduating with high debt. If the MBA degree is being completed after graduation from medical school, the degree often is completed while maintaining full-time medical work. The extra time commitment may take away from training or family time, and the additional workload may be draining.

Furthermore, completing business training, if it is not incorporated into the medical school curriculum, likely requires additional funding. Medical students may incur additional debt, and post-graduation business students may incur out-of-pocket costs.

Advantages

Finally, one survey of physicians who completed a dual MD/MBA degree in the past noted that few respondents felt that the MBA was seen as a distraction from their medical career.(31) While survey data noted some negatives to obtaining business training, most respondents did not report any downsides to obtaining the degree, and instead reported the overwhelmingly positive impact the training had on their careers and lifestyle.

Despite the disadvantages of obtaining a business degree, the disadvantages of not obtaining some sort of business training seem to be greater. Healthcare is a business, and to adequately navigate the new healthcare environment without burnout requires business training. Although some MD/MBA programs require a fifth year, not all programs do, and students may seek out medical schools with programs that have a shorter time requirement. A few schools also are beginning to build business training into their curriculum, allowing students to develop their business acumen while still graduating from medical school in four years.

Although business training may require additional expense if not incorporated into the medical school core curriculum, the cost may be earned back easily with adequate business education. Physicians with good financial literacy as a result of their business training may be better able to manage their debt and personal finances, leading to greater wealth in the future. Additionally, physicians with business training will likely run their healthcare organization more efficiently. Better debt management and a more cost-efficient practice may mean the physician can retire earlier, earning back the time and money lost to business training. Finally, the improved quality of life and career satisfaction many obtain as a result of their business training may, for some, outweigh any monetary loss.

Recommendations

Ju et al.(34) state that “Physicians are trained from day one to develop three core abilities—the capacity to learn, the confidence to operate with uncertainty, and domain expertise in an area of healthcare. While these attributes are entrepreneurial in nature, addressing challenges in healthcare will also require creative problem-solving, risk-tasking, and technical and business literacy – skills and experience that should be cultivated through education in entrepreneurship early in a trainee’s journey.” Practicing physicians and physician–educators are beginning to see the correlation between a combined medical and business education.

Bonnie Darves(35) offers an emphatic appraisal of the need for the addition of business education to medical school education. She points out that physicians pursue formal business education for a whole host of reasons, but there are some common threads. For many, it’s a desire to effect change within their organizations or even healthcare delivery as a whole. For others, an MBA, Master of Medical Management (MMM) degree, or the Certified Physician Executive credential is viewed as a way to better position themselves as credible participants in big-picture discussions about organizational direction or in decisions that affect their specialty’s future.

As the complexities of medical practice increase, business training has moved from a luxury to a necessity for survival and success.

Increasingly, especially in large organizations, the business degree may be a requirement for those seeking a senior leadership position. Some physicians have a specific reason for getting an MBA or MMM, such as launching a new clinical service. A final subset of physicians obtains formal business education as a first step toward exiting clinical medicine and moving wholesale into a nonclinical leadership role.(11)

Leading experts concur with the need to provide business education to medical students. As the complexities of medical practice increase, business training has moved from a luxury to a necessity for survival and success. Doctors entering practice, whether as an employee of a medical group practice or a hospital system, or following the historical route of private practice, must be able assimilate to the complex maze of the healthcare industry.

We agree, based on our research, that medical schools should begin partnering with business schools to develop dual-degree or certificate programs that prepare young physicians for the business side of practice. Too often, naïve young physicians agree to poorly prepared employment agreements or poor partnership agreements or enter a practice arrangement with associates who may be conducting illegal business.

Conclusion

What can medical schools do to better prepare today’s doctors for an evolving world of medicine? What skills should medical schools teach in order to better meet the demands of value-based care? Medical schools should consider integrating business operations improvement and finance into physicians’ education. Both physicians in private practice and those who are otherwise employed will likely benefit from financial skills to help understand the potential risk and benefits of value-based care payment models. To adequately protect their financial interests, physicians need the skills to evaluate how financially exposed they are, how performance-based incentives will be split, and how performance goals will affect how they practice medicine on a day-to-day basis. These skills are important whether an agreement comes from a payer or a practice manager. A successful physician will need an understanding of the healthcare business, as well as business acumen to assess growth opportunities.(36)

Acknowledgment: The authors thank the Marsha Lilien Gladstein Foundation for supporting this project.

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