CMO(s) are MVP(s)

The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article.

Arguably, the most valuable player in most healthcare organizations is its Chief Medical Officer (CMO). It’s a job that appears attractive from a distance but a closer look might prompt many aspirants to say “not so fast my friend.”

Last Saturday, in Miami, the Navigant Center for Healthcare Research and Public Policy conducted a focus group of eight CMOs representing hospitals and health systems, health plans, medical groups and post-acute facilities to ask about how their role is changing. Our research partner, the American Association for Physician Leadership (AAPL)¹ is keen to understand how this role is changing, how it provides increased value to organizations and what physician leaders need in order to be successful.

The results were surprising: Chief Medical Officers relish the challenge of their role and understand the issues and challenges they face.  But in most cases, they lack the tools and organizational support necessary to fulfill their role as effectively as they’d like.

Background: The role and scope of responsibility of a Chief Medical Officer has evolved in the U.S. health system. In most sectors, it traditionally served as an assurance to practicing physicians that a clinically-trained M.D. who had “real world,” practical experience seeing patients has a seat at the management table, alongside the suits and bean counters, to offer a clinical perspective when requested. The designee was typically an individual with gray hair, highly-respected as an astute clinician, well-liked by his/her peers and without a professional blemish in the community. In smaller organizations, the role was part-time; in bigger organizations, a full-time management slot with these perfunctory responsibilities:

In each of these settings, the role is expanding well beyond these perfunctory responsibilities putting unprecedented pressure on CMOs around four key themes:

  1. Clinical transformation: As health costs increase, methods for diagnosing, treating and coordinating care that improve outcomes while reducing costs will be required. The CMO is the point person for these efforts. In hospitals and medical groups, it requires teams that work together to reduce avoidable errors, increase adherence to evidence-based practices, reduce unnecessary care and encourage individuals (patients) to participate actively in their care. In post-acute and ambulatory environments, CMOs must manage coordination across multiple settings prone to poor hand-offs. In payer settings – Medicare, Medicaid, employers and insurers – it means CMOs are tasked with creating care management plans that incentivize desired behaviors by providers that do not compromise quality while reducing unnecessary cost. Ineffectiveness on the part of the CMO in these settings can mean disaster for the organization.
  2. Physician engagement: The majority of physicians are well-trained and competent. They desire complete individual clinical autonomy, compensation that’s high and productivity-based (volume), unquestioned admiration from their patients and freedom from intrusion from “suits”. Many still decry, but are gradually adjusting to the new normal – team-based care, transparency about their clinical performance and business relationships, and clinical integration with their peers and hospitals operationally, financially and clinically. In provider settings, organizing physicians to provide evidence-based care, reduced inappropriate variation and lower costs are necessary, risky tasks. In payer settings, designing carve outs, networks and panels, establishing guidelines for coverage and procedures for denials, and managing publicly-accessible data about the performance of individual clinicians is equally necessary and risky. CMOs are the frontline to change management in both settings. Rank and file physicians believe they should be left alone. It’s the CMOs task to engage physicians effectively and appropriately—easier said than done.
  3. Provider-sponsored risk: Payers (Medicare, Medicaid, employers, and health insurers) want more value for their dollars spent in healthcare. They demand lower costs and improved outcomes, believing the two are achievable in like-minded provider organizations. They’re aggressively shifting financial risk to providers via patient-centered medical homes, accountable care organizations, bundled payments, reference pricing, hyper-narrow networks and other strategies that accelerate their transfer of risk to providers. CMOs play the key role in these risk-sharing relationships: unless physicians play well together, shared risk is unachievable. But “playing together” is not about “M Deity.” It’s about care coordination wherein clinical decisions are made collaboratively with care teams and patients and avoidable unnecessary costs are a primary aim of the team. Getting physicians to collaborate is often easier said than done, especially when money is at risk.
  4. Super systems: The future of the health system inevitably favors big, strong regional health systems that offer a full-range of conventional and alternative health services and in some cases, a self-sponsored health plan. In consolidating the delivery system, inefficiencies are common, cultural dynamics testy, work flow complicated and leadership challenged. “Going big or getting out” drives mergers and acquisitions, diversification, new infrastructure investments and organizational transformation. And going big is no assurance of success. The healthcare versions of Costco and Walmart must always be vigilant about each other while paying close attention to Amazon, Zappos and eBay and their rules of engagement. CMOs must adapt to larger roles in these complicated super systems. They are on point to address how these systems balance profit and purpose, cost and quality, physician satisfaction, clinical standardization and more.

At our meeting in Miami, the CMOs acknowledged the enormity of these challenges and expressed confidence in their personal and professional desire to lead their organization’s responses. They want education about how to respond, tools to assess and measure trends and results, and opportunities to share their experiences with peers in similar circumstances. They’re unafraid of the future, but sober about the potholes and speed-bumps that chart the path. They understand their perfunctory tasks will continue, but see their role expanding in the C suite. They know that having an M.D. degree alone is not qualification enough for effective leadership. Business acumen, in-depth knowledge of how each sector in healthcare operates, promising clinical innovation, structuring data and advanced analytics that’s useful to decision-making, and operating in complex organizational structures across multiple markets and in varied businesses are the vistas for their professional growth. CMOs see their future positively; they are keen to take on these challenges and play a bigger role in leading their organizations.

Chief Medical Officers are the MVP in most healthcare organizations. Getting the right individual in the role is perhaps the most important decision a CEO makes. Getting it wrong can threaten the sustainability of the organization.

Paul

¹About AAPL: Mission: “To ensure that physicians can continually grow as individuals and become successful health care leaders, the American Association for Physician Leadership® develops and provides the necessary programs, products and services.”

The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.

©2015 Navigant Consulting, Inc.