Ore. physician-owned hospital escapes Physician … choose high-quality and low-cost doc-tors. Based...

BY JAY GREENEWilliam McGuire, M.D., sees the health-

care system as overly complex—gaps existwithin socio-economic groups; costs are toohigh; and quality improvements are needed.As chairman and chief executive officer ofthe nation’s largest insurer, UnitedHealthGroup, Minnetonka, Minn., McGuire wantsto achieve economies of scale and providea variety of health products.

As a result, UnitedHealth Group hasgrown like crazy. Its earnings on operationshave risen 345% over the past decade to$5.4 billion in 2005 on $45.4 billion inrevenue for an 11.8% margin comparedwith $742 million on $11.8 billion in rev-enue in 1996.

With the 2005 acquisition of PacifiCareHealth Systems, UnitedHealth’s member-ship grew to 65 million last year from 61million in 2004. Over the past four years,UnitedHealth has tripled its membership.

“Based on our strong position andContinued on p. 2

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Ore. physician-owned hospital escapesCMS scalpel—for now Page 4

Editorial FeaturesNews . . . . . . . . . . . . . . . . . . . 4

Briefly . . . . . . . . . . . . . . . . . . 6

Opinion . . . . . . . . . . . . . . . . . 8

Commentary . . . . . . . . . . . . . 9

By the Numbers . . . . . . . . . . 14

News Makers . . . . . . . . . . . 15Business news and information for physician-executives, leaders and entrepreneurs

Physician readers sound off on pros,cons of doc ownership Page 8

ACPE’s Barry Silbaugh comments ongrowing power of doc-execs Page 9

PHYSICIAN EXECUTIVES

Vol. 10/No. 5 • May 2006

50THE

MOSTPOWERFUL

IN HEALTHCARE—2006

William McGuire, M.D.Chairman and CEO

UnitedHealth GroupMinnetonka, Minn.

1 2

Donald Berwick, M.D.CEO, Institute for Healthcare

ImprovementCambridge, Mass.

business momentum entering 2006, we nowanticipate a further increase in our earningsper share growth to a range of 21% to 23%over our 2005 results,” McGuire said in aJan. 19 statement.

When the blunt-talking yet intensely privateMcGuire took over in 1991, UnitedHealth was aregional HMO. Over the past 15 years,McGuire, 58, has acquired more than 30 firms,turning UnitedHealth into one of the nation’smost diversified health companies.

While McGuire ranked No. 6 in last year’spoll, readers of Modern Physician this yearvoted him to the No. 1 spot on the magazine’ssecond annual ranking of the 50 Most PowerfulPhysician Executives. Through a spokesman,McGuire, who grants few interviews, declinedto comment for this story. Instead,UnitedHealth offered Reed Tuckson, M.D., sen-ior vice president for consumer health andmedical-care advancement, for an interview, butModern Physician declined.

William Jessee, M.D., 59-year-old president

and CEO of the Medical Group ManagementAssociation, Englewood, Colo., who is rankedNo. 19, says McGuire has a twofold reputationin the medical community.

“He is CEO of the biggest player on the block.Now they have done their merger withPacifiCare, some would say the biggest gorillain town,” Jessee says. “There also is a lot ofenvy over his salary. An interesting question isdoes power relate to how much your compen-sation is?”

In 2006, McGuire cashed in $136.7 million instock options “to support significant new andexisting philanthropic commitments,” the compa-ny explained. This follows the sale of $114 mil-lion of his shares in 2004. In April, UnitedHealthsaid an independent committee has beenappointed to review the insurer’s stock-option-granting practices, and independent counsel hasbeen engaged to assist the committee. McGuiresubsequently recommended that UnitedHealthstop awarding new stock options to its seniorexecutives, including himself. The insurer’sboard will consider the recommendation at itsmeeting this month.

Last year, McGuire’s most controversialaccomplishment included rolling out a physi-cian-performance rating system in 12 markets,including Chicago and St. Louis. The UnitedPerformance Plan is designed to help con-sumers choose high-quality and low-cost doc-tors. Based on their scores, as determined byUnitedHealth, doctors received stars next totheir names on the company’s Web site.

After objections were raised by a number ofhospital systems, physician groups and profes-sional organizations, including the MGMA andthe American Medical Association,UnitedHealth altered the program.

In an April 4, 2005 article in ModernHealthcare, Jessee said this of UnitedHealth’s

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Continued from p. 1

Continued on p. 3

Modern Physician | May 2006 • 2

William Winkenwerder, M.D.Assistant secretary of defense for health affairs Defense Department, Washington3David Brailer, M.D.National coordinator for healthinformation technologyHHS, Washington4Mark McClellan, M.D.AdministratorCMSBaltimore5William Frist, M.D.Senate majority leader (R-Tenn.), U.S. Senate Washington6Thomas Royer, M.D.President and CEOChristus HealthIrving, Texas7

Julie Gerberding, M.D.Director, Centers for DiseaseControl and PreventionAtlanta8James Mongan, M.D.President and CEOPartners HealthCare SystemBoston9

Patrick Quinlan, M.D.CEOOchsner Clinic FoundationNew Orleans10Robert Pearl, M.D.Executive director and CEOPermanente Medical GroupOakland, Calif.11Richard Carmona, M.D.U.S. surgeon generalU.S. Public Health ServiceWashington12

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performance program: “It’s incon-ceivable to me just how incrediblypoorly thought out and executedthe program is.”

Jessee now says UnitedHealthhas responded to its critics bymodifying the ranking system toput quality measures ahead ofcost measures. “They give you astar for hitting the quality meas-ures, and if you hit the cost meas-ures, you get another star,” hesays. “It has the potential forbecoming useful information toconsumers.”

Of the 50 physician-executiveson the 2006 list, 15 are hospitalor system CEOs, 10 are in gov-ernment, five are from medicalgroups, three work for HMOs and17 represent consumer, busi-ness, medical school or profes-sional organizations.

‘Optimistic’ agenda“I am very gratified of the

expression of confidence in whatwe are doing here,” says DonaldBerwick, M.D., CEO of theInstitute for HealthcareImprovement, Cambridge, Mass.,who is ranked No. 2.

Berwick, who co-founded the IHIin 1991, says his recognition as amost powerful physician-executiveis because the IHI’s mission hasstruck a nerve in the medical andnursing profession.

“Clinical people are feeling bat-tered, and there is an air of pes-simism,” Berwick says. “The IHI

Continued from p. 2 has an optimistic and ambitiousagenda. We have hooked into theintrinsic motivation for good ofdoctors and nurses. To me, it islike striking oil. There is a deepneed to do a good job and takecare of patients.”

“Information is crucial for thehealthcare system to functioneffectively. Since we are produc-ing information on healthcare,our message is what becomespowerful,” says Carolyn Clancy,M.D., director of the Agency forHealthcare Research andQuality, Rockville, Md., whoranked No. 16.

“I believe I get on these listsbecause of what Denver Healthhas done for people in the com-munity,” says Patricia Gabow,M.D., CEO and medical director ofDenver Health, who ranked No. 27.“We are a model for the nation inhow to deliver very high qualityhealthcare in a very efficient way.”

More than 20 physicians on thelist also made ModernHealthcare’s 2005 100 MostPowerful People in Healthcare list.They include Jessee, Berwick andWilliam Winkenwerder, 51, assis-tant secretary of defense forhealth affairs at the DefenseDepartment, ranked No. 3.

In 2006, Institutional Investornamed McGuire to its list of thebest CEOs in America.Interestingly, McGuire, who hasmade several best CEO lists,ranked only 90th on Modern

Continued on p. 10

BY JESSICA ZIGMOND Physicians’ Hospital, Portland,

Ore., has until May 24 to implementchanges required by the CMS, orrisk losing its Medicare certificationstatus. The hospital passed the firsthurdle in the effort when the CMSon March 17 removed it from the“immediate jeopardy”track toward termination.

In late February, CMSofficials had toldPhysicians’ it wouldneed to meet cer tainguidelines by March 19to avoid being terminat-ed from the Medicareprogram. The physician-owned hospital submit-ted a list of correctivemeasures and began toimplement changes,including hiring a regis-tered nurse as a full-time com-pliance officer and revisingstaff bylaws.

It also ceased inpatient surger-ies, although outpatient serviceswere not affected. At the time,Bill Houston, chief executive offi-cer at Physicians’, said about21% of the hospital’s businesscame from Medicare.

The hospital had until March 24 tosubmit a plan of corrective action tocomply with five other conditionsunrelated to the immediate jeopardyand implement those changes by

May 24 or risk being terminated byHHS, says Michael Marchand, direc-tor of public affairs for the CMS’regional office in Seattle.

Dianne Danowski-Smith, a spokes-woman for 39-bed Physicians’Hospital, says Physicians’ submitteda plan of corrective action to the

CMS on March 22 for theconditions that need to bemet by May 24.

“When you’re on animmediate jeopardy trackfor 23-day termination, themeasures were in regardto that immediate jeop-ardy,” Marchand says.

On March 16, represen-tatives from the CMS andthe Oregon Departmentof Human Services, whichlicensed the facility as ageneral, acute-care hospi-

tal, paid an unscheduled visit toPhysicians’, Marchand says. Afterthe visit, the CMS lifted the imme-diate jeopardy designation.

The Oregon Department of HumanServices received two complaintsabout Physicians’ in 2005, and oneincident caught the attention of theSenate Finance Committee’s chair-man, Chuck Grassley (R-Iowa), andits ranking minority member, MaxBaucus (D-Mont.), who called for afederal investigation into theoversight of physician-owned spe-cialty hospitals. ■

Physicians’ faces deadlineOre. hospital must make changes to satisfy the CMS

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Third Annual Distinguished Advisors Town Hall MeetingFeaturing: Carolyn Clancy, MD; David Lawrence, MD;Lucian Leape, MD; James Conway, MAMModerated by: Margaret O’Kane, MHA, President ofNCQA andRosemary Gibson, MSc, author of Wall of Silence

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Marchand sayschanges must bemade by May 24.


BY ANDIS ROBEZNIEKSWhen it comes to improving

healthcare quality, the acting chiefmedical director for the CMS,Barry Straube, M.D., favors takinga measured approach.

To be more precise, he favorsdeveloping more performancemeasures created forspecific medical spe-cialties, promoting theuse of health informa-tion technology to col-lect and analyze datapertaining to thosemeasures and aligningmeasures and goals sophysicians participatingin several differentquality-improvementprograms don’t have towaste time collectingseveral slightly differentdata sets to satisfy the differentprograms’ requirements.

“There’s a need to develop moremeasures faster,” Straube said inan interview before his presenta-tion at the American Board ofMedical Specialties’ assembly heldrecently in Rosemont, Ill. “A lot ofspecialties don’t have specialty-unique measures, and some areway ahead of others.”

Straube says that thoracic sur-geons “are way out ahead offolks” in the use of performancemeasures.

He also used his presentation toannounce a new program wheredoctors will be able to reuse thedata they collect while participatingin the CMS’ voluntary quality-reporting program for use in theAmerican Board of InternalMedicine’s maintenance of certifi-

cation program. “We believe that we

have to assist providersof all types to providegood care—and part ofthat is health IT adop-tion,” Straube says.“We’re not going to beable to buy computersand software for peo-ple, but we can providefree advice.”

The form this freeadvice will take includesgetting the quality-

improvement organizations con-tracting with the CMS to enrollabout 5% of the physician prac-tices in their regions in a programwhere an IT-needs assessment isdone for individual offices andoffice redesigns are recommendedto better incorporate IT into a prac-tice’s workflow. The AmericanHealth Quality Association, whichrepresents healthcare qualityimprovement organizations, said3,000 physician practices havesigned up for this program in thepast eight months. ■

‘A measured approach’CMS’ Straube uses data to gauge true quality

N E WS

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Straube: Qualityimprovement willbe main focus.


Second mistrial in kickback caseThe second trial against AlvaradoHospital Medical Center, San Diego,ended in a mistrial for the same rea-son as the first: The jury could notreach a unanimous verdict. TenetHealthcare Corp., Dallas, whichowns Alvarado, said U.S. DistrictJudge M. James Lorenz in SanDiego declared a mistrial. Alvaradoformer Chief Executive Officer BarryWeinbaum and a Tenet subsidiarystand accused of conspiring to paykickbacks to physicians for admittinglarge numbers of patients to thehospital. “This case has amplydemonstrated that the law surround-ing physician-relocation agreementsis complicated and subject to differ-ing interpretations,” Tenet GeneralCounsel Peter Urbanowicz said in anews release. At a status hearing inthe case in mid-April, the U.S. attor-ney sought and received more timeto decide whether to pursue a thirdtrial. The next status hearing isscheduled for May 22. The first caseended in a mistrial in early 2005.

Recruiting scheme criticizedSan Francisco’s Board of Supervisorsunanimously approved a resolutionurging Brown & Toland Medical Groupto stop an alleged attempt to signChinatown doctors to exclusive con-tracts, which critics say could jeopard-ize healthcare for thousands. The res-olution came after San Francisco CityAttorney Dennis Herrera sued the1,500-member physician group forunfair business practices related toits recruitment effort. The controversy

involves about 165 doctors whobelong to the Chinese CommunityHealth Care Association, the medical group affiliated with 54-bedChinese Hospital of San Francisco.Brown & Toland, the city’s dominantdoctor group, has been trying torecruit the physicians, offering con-tracts that critics say would requirethe doctors to resign from theChinatown association. Brown &Toland denied the allegations.

Spend money to make moneyThe most profitable multispecialtymedical groups spent more on sup-port services and staffing in 2004than their less-successful counter-parts, according to a study by theMedical Group ManagementAssociation. Better-performinggroups reported 22% higher operat-ing costs per full-time-equivalentphysician than other groups. Andtheir medical revenue after operatingcosts was 33% higher per physi-cian—about $362,600 comparedwith about $273,000. “It seems themore successful groups are strategi-cally investing in their practices tohelp support the practice in the longterm,” Daniel Stech, director ofMGMA survey operations, said in anews release.

Fee honesty promotes patient trustDisclosing how physicians are com-pensated may increase patient loy-alty without harming patients’ trustin their doctors, according to astudy in the Archives of Internal

B R I E F LY

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Medicine. Researchers examinedhow disclosure affected 8,000patients treated by two large grouppractices in Boston and LosAngeles when physicians receivedboth salary and performanceincentives. Half of the patientswere mailed a letter explaining howthe physicians were compensated,while the other half did not receivea letter. Among patients whoremembered receiving the letterthree months later, less than 5%of patients in both cities said itdecreased their trust.

Lower rate of docs offer free careThe proportion of physicians provid-ing charity care dropped 8 percent-age points in the last decade, fallingto about 68% in 2004-05, accordingto a national survey by theWashington-based Center forStudying Health System Change. Thesurvey, part of a nationally represen-tative tracking survey that includedabout 6,600 physicians, says charitycare has declined for physicians atall levels of income, major specialtygroups and geographic regions of thecountry (See chart, p. 14). Doctorsat the highest levels of income aremore likely to provide charity care,with about 76% of those withincomes greater than $250,000reporting some free or reduced-costcare, compared with 66% of thosewith incomes less than $120,000.The decline was blamed on severalfactors, including a surge in demandfor physician services in recent years

and declining reimbursements formany doctors.

Medical school salaries flat …Salaries at academic medical prac-tices stagnated in 2004, with annualcompensation stuck at about$195,000 for specialty physiciansand increasing just two-tenths of apercent to about $135,200 for pri-mary-care physicians, according toa survey by the Medical GroupManagement Association. The datademonstrate continued belt-tighten-ing by academic practices facingvarious economic stresses. By com-parison, compensation rose almost8% for specialists and 5.3% for pri-mary-care doctors in 2003.

… don’t say that in FloridaThe University of Central Florida,Orlando, and Florida InternationalUniversity, Miami, won approvalfrom Florida’s Board of Governorsto establish two new medicalschools. The 15-1 vote clears theway for the pair to seek publicfinancing from Florida’s Legislature.FIU will seek $18 million in publicfunding during its first two planningyears and $20 million annuallythereafter in public operating funds,an FIU spokeswoman says. TheMiami medical school would admit36 students into its first class andexpand over eight years to admit120 each year. UCF will seek $4 million in public planning fundsand roughly $20 million annually instate operating funds, a UCFspokesman says.

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O P I N I O N

If money is power, then ModernPhysician readers sure got it rightwhen they voted William McGuire,M.D., chairman and chief executiveofficer of insurance powerhouseUnitedHealth Group, as the indus-try’s most powerful physician-execu-tive. McGuire guidedthe health insurer to a$3.3 billion profit lastyear on total revenueof $45.4 billion. Thatyear, McGuire helpedhimself to an eye-pop-ping $136.7 million instock options for hiseffort. McGuire’spower and influencewill be tested this yearas he and UnitedHealthface an independent committee’sreview of the insurer’s stock-optiongranting practices, a topic also ofhigh interest to the Securities andExchange Commission.

McGuire topped this year’s list ofthe 50 Most Powerful PhysicianExecutives in Healthcare, ModernPhysician’s second-annual rankingof the high and mighty of the med-ical profession. Ron Anderson,M.D., president and CEO ofParkland Health & Hospital Systemin Dallas, topped last year’s inaugu-ral list.

To compile this year’s ranking,Modern Physician announced therecognition program in the Dec. 5,

2005 issue of our sister publication,Modern Healthcare, and simultane-ously on Modern Physician’s Website, modernphysician.com. FromDec. 12, 2005, to Jan. 13, readerssubmitted nominations for the desig-nation on the site. We then took the

100 who received themost nominations andplaced them on a final bal-lot. From Jan. 23 to Feb. 17, readers visitedthe site a second time tocast their vote for the can-didate who they believedshould make the final list.The 50 who received themost votes made the finallist, with the ranking deter-mined by the number of

votes received. Modern Physicianreserved the right to resolve votingirregularities. The magazine received5,101 votes on the final ballot, upfrom about 3,200 last year.

The list of the Top 50 MostPowerful Physician Executives inHealthcare for 2006 appears in thisissue as well as the April 24 issueof Modern Healthcare.

If you have any comments or ques-tions about the results or polling pro-cedures, please contact DavidBurda, editor, Modern Physician,360 N. Michigan Ave., Chicago, Ill.60601; by phone at 312-649-5439or by e-mail at [email protected] you.

Finding the powerEditor’s Note: The following lettersappeared in Modern Healthcare, oursister publication, but they addresstopics routinely covered in ModernPhysician. We believe the opinionsshared below will be of interest toModern Physician readers.

Hospitals do it, tooHospitals also self-refer. One aspectof the specialty-hospital debate thathas not been considered is the factthat hospitals which hire physiciansdo so to engage in self-referral.Witness the demise of a heart spe-cialty hospital in Milwaukee; thelocal community hospitals thatemployed emergency physiciansforced them to not refer patients tocardiologists that had interests inthe heart hospital.

You should do an article on thereferral behavior of hospitals thatemploy their own medical staff orown and operate primary-careclinics. If doctors are bannedfrom owning specialty hospitals,then hospitals should be bannedfrom owning and operating med-ical clinics and steering referralsto their facilities.

George Fournier Jr., M.D.Urologist

Yankton (S.D.) Medical Clinic

Patients first, ROI secondThe vast majority of physicians rec-ognize the inherent conflict of inter-

Most powerful doc-exec list topped by McGuireL E T T E R S

DAVID BURDAEditor

What do you think? Let us and your fellowModern Physician readers know. Send yourletter to the editor to [email protected].

est in owning a facility and self-referring patients to that facility. Thisissue is not about better quality,and it is not about a fear of compe-tition. As a physician, I know thepower and influence we have overour patients in making medicaldecisions. This is a trust thatpatients grant to us and that wemust never break.

Competition does not existwhen the only person who canadmit a patient to a hospital is aphysician and that physician justhappens to own a facility wherehe will personally profit each timehe refers a patient to that facility.I talk with physicians every daywho are very uncomfortable withthe financial incentives associatedwith owning hospitals and whoare also concerned that this con-flict of interest does not reflectwell on our profession.

Let’s try to remember that ourpatients rely on us to place theirbest interests above all else,including the financial rewardsthat physician-owners seek.

Daniel Blue, M.D.Family physician

Sioux Valley ClinicSioux Falls, S.D.


BY BARRY SILBAUGHLook over Modern Physician’s

list of the most influential physi-cian-executives and one thing isabundantly clear—physician-executives are making an impactin a broad spectrum of health-care organizations,businesses, govern-ment and industry.

Huge insurance compa-nies, the Department ofDefense, top-line hospi-tals and health systems,the Centers for DiseaseControl and Prevention,prestigious universitiesand the U.S. Senate areamong the many placeswhere physician-execu-tives go to work eachday.

Each person on this list probablystarted somewhere else—typicallyon a medical staff. But the days ofphysician-executives being pigeon-holed as medical directors andvice presidents of medical affairsare fading. Sure, many highly tal-ented physician-executives stillhold those titles, but they aren’t

limited to those positions.Two questions all physician-exec-

utives should be asking: Of thephysicians you work with today,which ones have the potential toachieve leadership positions? Haveyou invested your time and re-

sources to mentor andencourage these menand women to becomethe next leaders for qual-ity, safety and innovationin your organization?

Proof of the expandingreach and demand forphysician-executives canbe found in a recent whitepaper by WilliamFulkerson Jr., chief execu-tive officer of DukeUniversity Hospital,Durham, N.C., and

Deedra Hartung, vice president andpractice leader, of Cejka Search, aphysician-executive recruiting firm.

“Physicians have a uniqueunderstanding of healthcare; theyunderstand healthcare delivery—what is being created for thepatient, and patient care—per-haps more than anyone else,” thewhite paper states.

“In addition, numerous graduateprograms in business, healthadministration, public health andmedical management are givingphysicians the administrativeexpertise required for true leader-

CO M M E N TA RY

Up-and-comers ship and executive roles. Withtheir understanding of healthcare,plus the additional education,physicians are better-prepared toimpact, lead and improve financialoutcomes and success for health-care organizations.”

Along with their operationalroles, physician-executives areheavily involved in the nationwidequality and safety movement.Physician-executives use their bed-side experience and managementtraining to lead system change byimporting lessons learned in otherhigh-risk industries to improvesafety in healthcare.

The quest to acquire both med-ical and business knowledge isgrowing rapidly. More than 40 uni-versities now offer an M.D.-MBAdegree, and about 2,000 physi-cian-executives are taking coursestoward advanced managementdegrees at the American College ofPhysician Executives.

The interest in physician-execu-tive leadership isn’t confined to theU.S. Over the past eight months,the ACPE launched a grass-rootsinitiative to contact physician lead-ers in other countries to see ifthere was an interest in formingsimilar associations abroad.

The response was stunning,with physicians in 24 countriesnow working to gather groups ofphysician-executives together totackle healthcare concerns.Some of the countries formingACPE-like groups include China,Japan, Mexico, the Netherlands,

Physician-executives take the lead

Silbaugh: The callfor physician-execs is growing.

If you’re a physician and you’d like to tellyour business story, please contact us [email protected]. Submissions shouldbe no longer than 1,000 words and shouldinclude a color photo of the author.


Nigeria and Turkey.Understanding consumer health-

care was one of the many topicsdiscussed by more than 600 physi-cian-executives who met late lastmonth at the ACPE’s SpringInstitute in Las Vegas. Other topicsaddressed included: making apolo-gies for medical errors, managingphysician performance, and creat-ing safe and productive healthcareorganizations. Among the expertsgathering to talk about these top-ics are Harvard University’s LucianLeape, adjunct professor of healthpolicy, and Brent James, executivedirector of the Institute for HealthCare Delivery Research atIntermountain Healthcare, SaltLake City.

These are tough issues. Wemust all commit to reachingbeyond our individual and corpo-rate niches and egos to findsolutions to these and manyother healthcare problems thataffect us all. If we are coura-geous, curious and critical,physician-executives can graspnew ideas emerging from out-side industries that might trans-form the world of healthcare.

The physician leaders who arewilling to take on these chal-lenges will likely find their ownnames on future lists of influentialphysician-executives. ■

Barry Silbaugh, M.D., senior healthcarepartner with Creative ManagementGroup, is president of the AmericanCollege of Physician Executives.

comes. Part of it is coaching, mentoring, teach-ing, focusing on operations and creating a vision.I am the first to admit I am not doing all thesethings well. But being on the list gives me somereassurance that people within the organizationare doing many things right.”

The power of motivation The IHI’s Berwick understands power comes

from the ability to lead and motivate. Over thepast two years, Berwick’s biggest challengehas been saving 100,000 lives by June 14.IHI’s 100K Lives Campaign, which asks hospi-tals to incorporate six healthcare quality-process changes, is more than 60% towardachieving the goal, he says.

“We could get there,” Berwick says. “We areusing the word saturation to describe what weare doing. If we want to drive the standard ofperformance, everybody needs to be onboard.”

Berwick admits that “everyone swallowed”when he first suggested the goal to senior IHIleadership during the summer of 2004. The 90-member staff and 200 associated facultymembers already felt stretched thin, he says.

“We were pretty concerned in the first threemonths, and I wondered whether we wouldhave trouble recruiting at least 2,000 hospitalsto make this work. It looked impossible.Hospitals hardly do anything together except tolobby for higher payments,” Berwick says.

But hospitals surprised Berwick. “Theresponse has been absolutely incredible,” hesays, noting that more than 3,000 hospitalsare participating. “By month four, the faxmachine overheated with all the data comingin. The outpouring of interest and sinceremeaningful enrollment has been inspiring.”

In June 2005, six months after beginning theproject, Berwick says he read a newsletter from

COV E R STO RY Modern Physician | May 2006 • 10

Healthcare’s 2005 list of the 100 MostPowerful People in Healthcare.

Born in Troy, N.Y., McGuire graduated with amedical degree from the University of TexasMedical Branch, Galveston, in 1974, the sameyear that UnitedHealth was formed. McGuirebecame chief resident in internal medicine atthe University of Texas Health Science Centerat San Antonio.

He practiced pulmonary medicine in ColoradoSprings, Colo., from 1980 to 1985, when he

became president and chief operating officer ofPeak Health Plan of Colorado. He joined United-Health in 1988 as executive vice president.

Interestingly, McGuire’s longtime hobby isstudying butterflies. Considered a nationalexpert, he even has several named after him,including a brown central Texas butterfly calledEuphyes mcguirei.

“You influence people in different ways,” saysThomas Royer, M.D., president and CEO ofChristus Health, Irving, Texas, who ranked No. 7.“Part of it is by actions and measuring out-

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Herbert Pardes, M.D.President and CEONew York-PresbyterianHealthcare SystemNew York13Elias Zerhouni, M.D.DirectorNational Institutes of HealthBethesda, Md.14

Gary Gottlieb, M.D.President, Brigham andWomen’s HospitalBoston17

Thomas Coburn, M.D.U.S. senator (R-Okla.)U.S. SenateWashington18William Jessee, M.D.President and CEOMedical Group ManagementAssociation, Englewood, Colo.19

Ron Anderson, M.D.President and CEOParkland Health & HospitalSystem, Dallas15Carolyn Clancy, M.D.Director, Agency for HealthcareResearch and QualityRockville, Md.16

Clifton Lacy, M.D.President and CEORobert Wood Johnson University HospitalNew Brunswick, N.J.

20Michael Maves, M.D.Executive vice president and CEO, American MedicalAssociation, Chicago21

Molly Coye, M.D.CEOHealth Technology CenterSan Francisco22

Massingale says the movement to pay-for-per-formance will encourage more physicians toenter the executive ranks.

“It should be easier for us as clinicians tounderstand it and communicate it better tophysicians and nurses,” says Massingale, whohas led the contract-management firm for 26 years. “There is a lot of resistance of physi-cians to pay-for-performance. A lot of doctorsfeel it is pay for lower utilization. Some feel it iseconomic credentialing in disguise. I don’t per-sonally believe that, but because of the powerof the payers, we are headed that way.”

Making pay-for-performance workWhile in academic medicine in the 1980s,

AHRQ’s Clancy, 52, conducted a study thatshowed providing financial incentives to doctorsand hospitals improved patient care.

“HMO patients had far fewer discretionarytests like chest X-rays,” Clancy says. “Now thefocus is on pay-for-performance. The questionis how to design these programs.”

Organizations such as AHRQ have providedencouragement to physicians because of theiremphasis on clinical improvement.

“This year we want to do two big things:Implement the patient-safety bill and provideinformation on what works and what doesnot,” says Clancy, who has been with AHRQ for16 years. She took over as director in 2002after the sudden death of Director JohnEisenberg, M.D.

After graduating from the University ofMassachusetts School of Medicine in 1979,Clancy completed her internal medicine residen-cy at Memorial Hospital, Worcester, Mass., in1982. She was elected to the Institute ofMedicine in 2004.

“I don’t come from a medical family. They hadbusiness backgrounds, but I knew I wanted to


Doylestown (Pa.) Hospital, announcing that thehospital was participating.

“I picked up the phone and called the hospi-tal CEO (Rich Reif). I thanked him and askedhim what is going on? Why be so bold?” herecalls. “He told me that ‘Nothing is moreimportant in my life than participating in thisproject.’ I thought, my goodness if this effortcould hook into this person, maybe we canmake it work.”

The number of physicians aspiring to be

CEOs of hospitals, insurance companies, med-ical groups or other healthcare organizationshas ebbed and flowed over the past 50 years.Since 2002, however, the number of physicianCEOs at hospitals has increased to 3.7% of6,008 hospitals in 2005 from 3.3%, accordingto the American Hospital Association.

“Physicians as a group have come to realizethat physician interests are best looked afterby physicians,” says Lynn Massingale, M.D.,53, chairman and CEO of TeamHealth,Knoxville, Tenn., who ranked No. 40.

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Jonathan Lord, M.D.Senior vice president, chief clinical strategy andinnovation officerHumana, Louisville, Ky.

23John Halamka, M.D.Chief information officerCareGroup Health SystemBoston24

Dennis O’Leary, M.D.President and CEO, JointCommission on Accreditationof Healthcare OrganizationsOakbrook Terrace, Ill.

28Delos “Toby” Cosgrove, M.D.CEOCleveland Clinic Foundation29Brent James, M.D.Executive director, Institutefor Health Care DeliveryResearch, IntermountainHealthcare, Salt Lake City

30Paul Tang, M.D.Chief medical informationofficer, Palo Alto (Calif.)Medical Foundation25

Charles Denham, M.D.ChairmanTexas Medical Institute ofTechnology, Austin31

Donald Nielsen, M.D.Senior vice president for quality leadershipAmerican Hospital Association, Chicago

26Patricia Gabow, M.D.CEO and medical directorDenver HealthDenver27

Harry Jacobson, M.D.Vice chancellor for healthaffairs, Vanderbilt UniversityMedical Center, Nashville32

cine had become under managed care.“I had a lot of latitude to study care

processes,” he says. “I learned that tradi-tional quality assurance in healthcare is diffi-cult and ineffective. It opened my eyes toquality improvement.”

But it was in 1999, when his wife, Ann, washospitalized with symptoms of a rare autoimmune disorder of the spinal cord, thatBerwick saw the flaws of the healthcare systemfrom the patient’s and family’s perspectives.

“All of that was happening to me, and I hatedit,” he says. In a speech a few months after hiswife’s hospitalization, he said about qualityimprovement: “Before, I was concerned. Now, Ihave been radicalized.” Ann recovered andreturned to her job as an attorney and environ-mental consultant.

A ‘journey to excellence’ Royer’s career spans jobs at Henry Ford

Health System, Detroit, where he was seniorvice president of medical affairs and chairmanof the medical group from 1994 to 1999, and18 years with Geisinger Medical Center,Danville, Pa., where he held posts as medicaldirector and founder of the hospital’s emer-gency medicine residency program.

A surgeon, Royer completed his residency in1972 at Geisinger, where he was chief residentand president of the house staff association.He earned his medical degree from theUniversity of Pennsylvania in 1967.

Royer, 65, says his biggest challenge camewhen he joined Christus in 1999. It was onlyseveral months after the 40-hospital Catholicsystem was formed through the merger ofIncarnate Word Health System, San Antonio,and the Sisters of Charity Health CareSystem, Houston.

“We looked at the overall matrix, and while

be a doctor since I was 9,” Clancy says.The son of a country physician in Connecticut,

Berwick, 59, also knew at an early age hewanted to become a doctor.

After graduating with a joint degree in medi-cine and public policy from Harvard MedicalSchool and the John F. Kennedy School ofGovernment in 1972, Berwick became deeplyinterested in health policy. He interned atMassachusetts General Hospital, Boston, in1972 and then pursued a pediatrics residency

at Children’s Hospital Medical Center, Boston,finishing training as a senior resident in 1978.

“I wanted to stay in academic medicine, doresearch and see patients. In clinical medicine,I saw the visible continuing burden of thedefects in patient care,” he says. “Every doctorknows you are fighting uphill and how difficult itis sometimes to reach the patient.”

But it wasn’t until 1980, when he becameacting research director and director of qualityassurance at Harvard Community Health Plan,where he saw first-hand how inefficient medi-

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David Pate, M.D.Senior vice president andCEO, St. Luke’s EpiscopalHospital, Houston33Edward Murphy, M.D.President and CEOCarilion Health SystemRoanoke, Va.34

David Blumenthal, M.D.Professor of medicine andhealthcare policyHarvard UniversityCambridge, Mass.

36

James Schibanoff, M.D.Editor in chiefMilliman Care Guidelines Seattle35

Lynn MassingaleChairman and CEOTeamHealthKnoxville, Tenn.40

Quentin YoungNational coordinatorPhysicians for a NationalHealth Program, Chicago41

Robert WeinmannPresident, Union of American Physicians andDentists, Oakland, Calif.42

Jack LewinExecutive vice presidentand CEO, California MedicalAssociation, Sacramento39

Sidney Wolfe, M.D.Director, Public Citizen’sHealth Research GroupWashington37

David PryorSenior vice president of clinical excellenceAscension Health, St. Louis38


we had some excellent areas, we were not verygood overall,” he says. As a result, Royer initi-ated in 2000 what he calls “our journey toexcellence.” The goal of the initiative is toachieve the 90th percentile in various nationalstandards in four categories: clinical quality,patient service, business practices and com-munity value.

“A lot of factors helped us move from thelower third to the upper third percentiles inthese categories,” he says. For example, theeffort to improve business practices helpedChristus improve its operating margin from -7%in fiscal 1999 to about a 5% positive marginprojected in fiscal 2006. It also improved clini-cal quality to the 90th percentile from the 75thpercentile in measures that include mortality

rates and re-admissions, Royer says.“We realized we also needed to improve

patient satisfaction because that impacts ourfinancial performance and clinical quality,”says Royer, who authorized an employee incen-tive program. But what propelled them to thetop percentile nationally was guaranteeingexcellent care.

In 2003, Christus became one of the firstsystems to offer patients a written guaranteefor exemplary service. The guarantee provides“apology gifts” to patients that include giftcertificates, coupons for free health tests andgift baskets.

“We want to increase transparency in thisorganization so the community can see ourfinancial picture and community value. If we dothat, then we can be held accountable and we


Jay Greene is a former Modern Healthcarereporter and now a freelance healthcare writerbased in Thompson, Conn. Contact Greene [email protected].

can’t be complacent,” Royer says.Gabow earned her medical degree at the

University of Pennsylvania Medical School in1969 and completed her residency in internalmedicine at the Hospital of the University ofPennsylvania, Philadelphia, and Harbor GeneralHospital, now called Harbor-UCLA MedicalCenter, in Torrance, Calif., in 1971.

She joined the staff of Denver Health in1973 as chief of the renal division and becamedirector of medical service in 1991. Gabow,62, became CEO in 1992.

“Our biggest accomplishment was when weleft city government in 1997 to form an inde-pendent public authority,” says Gabow, whoadds that she had to convince Denver’s mayor itwas a good idea. “I was persistent. The mayorasked me if I was ever going to get off thisissue. I told him until he said ‘yes.’ ”

Under Gabow’s leadership, Denver Healthupgraded its facilities, and opened new neigh-borhood clinics to serve the poor and unin-sured and new operating rooms.

Gabow, a nationally known researcher in poly-cystic kidney disease, continues to serve as aprofessor of medicine at the University ofColorado School of Medicine. From 1985 to2001, she was the principal investigator of theworld’s largest study of adults and children withautosomal dominant polycystic kidney disease,a study that led to treatment breakthroughs.

“I am most excited about launching an effortthe past 18 months in part from AHRQ tobegin system transformation,” Gabow says.“We would expect our costs to go down, ourrevenue go up, our employee turnover go downand see our excellence in quality go up.” ■

John Wennberg, M.D.Director, Center for theEvaluative Clinical SciencesDartmouth Medical SchoolHanover, N.H.

43Jeffrey Drazen, M.D.Editor in chiefNew England Journal ofMedicine, Boston44Harvey Fineberg, M.D.PresidentInstitute of MedicineWashington45Paul Convery, M.D.Executive vice presidentand CMO, SSM Health CareSt. Louis46

Darrell Kirch, M.D.CEO, Penn State Milton S. Hershey(Pa.) Medical Center; incoming president, Association of AmericanMedical Colleges, Washington50

John Anderson, M.D.Senior vice president and CMO, Catholic Health Initiatives, Denver47Robert Galvin, M.D.Director of global healthcare, General ElectricCo., Fairfield, Conn.48Ronald Greeno, M.D.Co-founder and CMOCogent HealthcareIrvine, Calif.49

BY T H E N U M B E R S

Source: Medical Group Management Association Cost Survey 2005: Report based on 2004 Data

THE CHECK’S IN THE MAILMedian days of gross fee-for-service charges in accountsreceivable for single-specialty groups.

Anesthesiology

52.1%

40.2%

39%

37.7%

54.2%

35.6%

42.4%

Cardiology

Family practice

Internal medicine

Orthopedic surgery

Pediatrics

Surgery: general

CHARITY CARE

Source: Center for Studying Health System Change

Percentage of physicians by specialty providing free care (2004-2005)

Internal medicine

67.2%

Family/general practice

66.7%

Pediatrics60.5%

Medical specialist63.7%

Surgical specialist

78.8%

PHYSICIAN EFFICIENCY VARIES

Source: Health Affairs

Dartmouth Medical School researchers studied how many physicianfull-time equivalents were used while caring for Medicare patients at 79 academic medical centers from 1999 to 2001. A greater number

implies more inefficiency. Below is a sample of their findings.

Academic medical center

PhysicianFTEs per

1,000 patients

New York University Medical Center, New York City Rush-Presbyterian-St. Luke’s, Chicago Methodist Hospital, Houston Allegheny General Hospital, Pittsburgh Temple University Hospital, Philadelphia University of Massachusetts Medical Center, Worcester University Medical Center, Tucson, Ariz. University of California Davis Medical Center, Sacramento University of Wisconsin Hospital, Madison University of Cincinnati Hospital

28.319.416.214.912 11.710.1 9.1 7.8

7.5


N E WS M A K E R S

ASSOCIATIONSJordan Cohen, M.D., president ofthe Washington-basedAssociation of American MedicalColleges, will receive theAmerican Hospital Association’sAward of Honor for his “outstand-ing contributions to improving thehealth status of communities andthe nation.” Cohen, 71, who isretiring from the AAMC in June, isscheduled to receive the honorMay 1, during the AHA’s annualmembership meeting inWashington. … The NationalPatient Safety Foundation, NorthAdams, Mass., appointed PaulGluck, M.D., 59, a Miami-basedobstetrician, chairman of theNPSF’s 15-member board of

directors. … TheArlington Heights,Ill.-basedAmerican Collegeof OsteopathicFamily Physicianselected StevenRubin, D.O., 50,as president-electof the 25,000-member organiza-

tion; Thomas Told, D.O., 64, wasinstalled as the group’s presi-dent. … Andrew Pollak, M.D.,

42, was elected chair of theBoard of Specialty Societies ofthe American Academy ofOrthopaedic Surgeons.

CONSULTANTSWitt/Kieffer, the Oak Brook, Ill.-

based executivesearch firm, hiredWilliam Downham,M.D., as a con-sultant in its St. Louis office.Downham, 58,formerly wasinterim executivevice president forcare management

at Private Healthcare Systems inWaltham, Mass.

HOSPITALS, SYSTEMSThompson Health, the

Canandaigua,N.Y.-based healthsystem, namedCarlos Ortiz,M.D., its seniorvice president ofmedical servicesand medicaldirector of thesystem’s hospi-tal, F.F.

Thompson Hospital. Ortizdeclined to disclose his age.

RESEARCHJonathan Sackner-Bernstein,M.D., 45, has been named to thenew post of chief medical officerof clinical research at Clinilabs, a

clinical research organization affili-ated with St. Luke’s-RooseveltHospital Center in New York. Healso is director of theCardiovascular Safety Unit atClinilabs. He had been director ofthe Heart Failure PreventionProgram at North Shore UniversityHospital in Manhasset, N.Y.

SUPPLIERS, VENDORSHKS Medical InformationSystems, Omaha, Neb., appointed

John Kelly, M.D.,to its board ofdirectors. Kelly,57, is vice presi-dent, chief healthand medical offi-cer of the UnionPacific Railroad.… Kenneth Kizer,M.D., chairmanand chief execu-

tive officer of software vendorMedsphere Systems Corp., AlisoViejo, Calif., received the 2006

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“Leadership in Innovation” awardfrom the Adaptive BusinessLeaders Organization. Kizer, 54,was cited for being a “pioneeringadvocate of information technol-

ogy as anenabler forimproving health-care quality” bythe Orange,Calif.-basedorganization,whose membersare CEOs andpresidents oftechnology and

healthcare companies. Kizer wasthe founding president and CEOof the National Quality Forum, anot-for-profit organization thatdeveloped consensus standardsfor healthcare quality improve-ment. The award will be presentedat the ABL’s annual Innovationsin Healthcare Awards and Eventceremony to be held June 7 inLong Beach, Calif.

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Kelly

Ortiz

Rubin

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