Health reform puts hospitals and systems at more financial risk than ever for care costs and quality, both inside and outside their facilities. But it doesn't change the fundamental fact that physicians, even employed physicians, remain the final arbiters of what care actually is provided.

The role of the chief medical officer increasingly revolves around influencing physicians and hospital administrators to create working relationships that benefit both. That requires a good grounding in both clinical and business skills. "To be able to work together and collaborate, CMOs and CNOs need some business background just as CFOs and CEOs need some understanding of clinical processes and quality," says Thomas C. Dolan, president and CEO of the American College of Healthcare Executives.

More physicians than ever are seeking business education, says Barbara Linney, vice president for career development for the American College of Physician Executives. Courses in finance, communication skills and management concepts sell out early at ACPE meetings with long waiting lists, she says.

But, while being able to read a financial statement is an essential skill, strategic management and communication may be even more important, Linney says. Given the need to constantly negotiate with physicians and hospital boards and work across departmental and institutional borders, CMOs need to know how to influence even when they have no direct control. "Sometimes they call these soft skills, but they are hard to do."

An effective integrated system often consists of hospitals and other services that work together rather than trying to put all operations under the hospital umbrella, says Joel Shalowitz, M.D., clinical professor of health enterprise management at the Northwestern University Kellogg School of Management. "I've always been a firm believer in letting people practice their core competencies. Hospital administrators know how to manage hospitals and doctors know how to manage physician practices. You can get the best of both if you form a joint venture."

Many systems are arriving at that conclusion, adding co-management, joint venture and affiliated medical groups in addition to employed physician groups. Where CMOs once focused mainly on quality and physician governance, they now have significant strategic responsibility for designing integration strategies that will work with local physicians, and day-to-day responsibility for making sure they work together efficiently.

Below are profiles of CMOs applying their skills to the challenges of today's rapidly changing health care environment.

A more strategic role

Donald A. Pocock, M.D. / chief medical officer, Morton Plant Mease Health Care, Clearwater, Fla., a unit of BayCare Health System, Tampa Bay area / Pocock oversees quality assurance, case management, infection control, utilization review, risk management, patient safety and three medical staffs in four inpatient facilities with nearly 1,100 physicians and 400 allied health professionals. Before joining Morton Plant Mease in 2005, he was CMO for four years at Roper St. Francis Healthcare in Charleston, S.C., and previously led a 40-physician medical group.

During my 11 years in hospital system administration, the CMO role has evolved from the classic vice president of medical affairs — serving as an adviser and interface between the hospital and medical staff, and overseeing physician credentialing, education, quality assurance and discipline — into much more of a strategist. I am more involved in implementing our strategic plan and developing physician leadership within the organization.

We are building a group of physicians we can rely on to address clinical problems and system needs. When I came, there was a lot of distrust among the three medical staffs. Two of them had been local rivals. We have put 125 doctors through a physician leadership education program and we are now into the second level of course work. That has given us a pool of physicians who have heard the same lectures and understand that the problems we face are more universal than the old rivalries.

We are building an employment base and relationships with clinical specialists. The majority of the doctors are in small groups. Medicare is the best payer in Florida, but for non-Medicare you can only increase payment rates if you are a large group. We have one large group that employs 110 primary care physicians and they get paid more than small groups for non-Medicare patients. They are all certified as a medical home, they are all trained in quality improvement and they have a fully implemented electronic medical record. Their outcomes are fantastic and they have top decile patient satisfaction. We are also developing a specialist group that has just formed with 25 physicians. At other BayCare facilities there are another 300 employed physicians.

Skills must match local needs

Timothy Jahn, M.D. / chief medical officer, Hospital Sisters Health System, Eastern Wisconsin division / Jahn oversees medical services at three hospitals in Green Bay and Sheboygan, Wis. Before becoming CMO he was an emergency department director and president of the medical staff at St Mary's Hospital, treasurer of a 200-physician multispecialty medical group and served in the U.S. Navy.

We have a 200-physician medical group that is aligned with the hospital, and partly owned by the hospital. I do not oversee the provider group, but it relates to us. It is part of the continuum of care and we look to have a seamless continuum of inpatient and outpatient services.

We have to be cognizant of payment mechanisms and how they will change. We are still mostly fee-for-service, but pay-for-performance measures, such as the government's value-based purchasing initiative, are already in place and will expand; we will have a 3 percent holdback for Medicare readmissions in 2013; and there is evidence commercial payers are interested in some form of performance-based reimbursement mechanisms as well. The state of Wisconsin also has an initiative for pay for performance that includes bundled payment among several payment options. Time will tell how far it will go but, obviously, any significant inroads will involve the CMO in system change.

You have to know quality and finance to succeed. My background as ED head gave me hands-on operational experience, and I served as treasurer of a $100 million medical group and chair of an investment committee that oversees an $80 million retirement portfolio, so I have some financial background as well. I have taken several management courses and have been accepted to a business school but, up to this point, finding the time has been challenging. I think the practical experience and mentoring have been quite valuable to me. Joining medical staff committees and taking on more management responsibility helped. I've seen a few physicians jump straight from clinical practice to management and it doesn't always work. You need to get experience in different realms.

The CMO role is not a given set of skills for the position; that skill set is shaped by the hospital's or local system's particular situation. The regulatory function in the hospital rests with the medical staff executive committee and the hospital board, neither of which are under the CMO. You are an adviser, but they make the decisions.

Finding common language smoothes relations

Hoda Asmar, M.D. / senior vice president and chief medical officer, Presbyterian Delivery System, Albuquerque, N.M. / Asmar has primary accountability for clinical excellence, clinical informatics and medical staff relations and serves as the key liaison to the employed and independent medical staff for the eight-hospital Presbyterian Healthcare Services. Before joining Presbyterian in 2011, she was CMO at Edward Hospital in Naperville, Ill.

Many organizations are moving toward a physician-driven model of care. Physicians are becoming equal partners and highly aligned with the organization. The CMO has a major role in leading this transformational change, linking various stakeholders and finding common needs and goals to create alignment and successfully achieve superior clinical, strategic and operational results.

At Presbyterian, we have many independent physicians and an integrated employed medical group. The goal is to partner with all of our physicians; we don't just focus on the employed group. For example, we look at clinical goals and outcomes from both hospital and physician perspectives. Both have a vested interest in achieving excellence. A critical aspect of my role as CMO is to help create a shared quality agenda with our physicians.

]The scope of control and breadth of the CMO role varies and you need to be comfortable in a role of influence. Formal management training is becoming a must, but you also need the soft skills of working across organizational lines, navigating change and understanding other key stakeholder points of view, whether they are clinicians, administrators, managers, insurers, regulators or the public.

Time to rethink clinical management complexity?

Chalmers Nunn, M.D. / senior vice president and chief medical officer, Centra Health, and president, Centra Medical Group, Lynchburg, Va. / Nunn oversees medical services and quality at three hospitals and an affiliated medical group. Before joining Centra, he served as CMO and vice president for medical affairs at a system in North Carolina.

Employing physicians and creating integrated systems is a big change in today's health systems. On the plus side, better integrated care is better quality care and it can be less expensive. But there are many challenges. There is a much bigger emphasis on ambulatory services, and where the patient is in the system, and now you have to worry about population health management. Preventing readmissions is a whole new language to learn as you move into ACOs and prepayment.

Physician compensation plans are difficult. How do you make it work when the doctors want more pay, but it comes out of the hospital? We had to hire a vice president for medical affairs so I could concentrate on employment. I have to get involved in compensation and call coverage, which are the two toughest issues in physician relations, and I am in a position where I have to fire people. I am a relationship person, but the administrative complexity we have created makes it hard to maintain relationships.

Measurement fatigue has taken the fun out of QI. It used to be we worked on things we thought were important. Now we work on reporting measures that other people think are important. It raises questions as to what it means to be a highly reliable organization and how you get there.

What it has led to is an extremely complex, high-pressure job. The CEOs are under pressure and they are pushing it down to the C-suite. There is a lot to accomplish with the physicians who work during the day, so we are seeing more late-evening meetings. The doctors are tired and we are tired, and that doesn't always support good decision-making.

A better approach may be to focus on improving individual product-line operations. So after 18 years in hospital administration, I am leaving to run a gastroenterology group. It's partly so I can keep seeing patients, but also because I can be more effective managing a focused service.

Complexity theory suggests you're better off empowering focused factories rather than trying to micromanage everything. Maybe we need to reinvent the system concept so it is more a convener of expert services. But the urge to try to control everything is always there. We need to apply Lean thinking to management and get rid of some of the clutter.

Keeping physicians involved to ensure quality

Mark Purtle, M.D. / vice president, medical affairs, and chief medical officer, Iowa Health System, Des Moines / Purtle oversees medical services at three acute care hospitals and one children's hospital in four facilities, and an affiliated medical group.

In the past couple of years it has become apparent that we now have responsibility for care delivered outside the hospital. We can no longer be siloed. We will be held accountable for care across the continuum and will be paid only to the extent that we have a functioning system that does not overutilize services and cause waste. A lot of what has been happening in the last couple of years is lining up the components of that system.

Physicians in this market have been lining up with hospitals for five or six years. They mostly choose to align with one hospital; I think it is due to the cost and complexity of medical practice. If you invest in an EMR system, you want to make sure it is compatible with other parts of the system.

We are aligning with physicians through employment and co-management agreements for service lines. The co-management agreements pay two-thirds based on quality measures and one-third based on financial performance. There is also an emphasis on quality in the new group we are forming. All our physicians have some pay at risk based on quality measures. We have had good results with this in our co-management agreement for orthopedics. The physicians are engaged and open to changing quality measures over time, and both clinical and financial performance are improving.

We are transitioning to a physician-led organization. Organizationally we are putting a dyad structure in place where each service line has both a clinical and an administrative leader.

At the system level, I work closely with the COO, who is also a physician, to ensure that the operations support excellent clinical practice. We have put more than 120 physicians through management training. Management training is important, but you don't necessarily need an MBA. You do need to have a good handle on quality, on systems and process improvement skills.

You also have to know how to do it, how to manage change. You have to manage relationships successfully and learn how to influence, particularly without command and control.

Howard Larkin is an H&HN contributing editor.




Eight CMO skill sets for integrating physician services

Clinical leadership: A reputation for clinical competence and leadership enhances credibility with physicians, though maintaining a current practice may not be practical or necessary.

Finance: As liaison between management and medical staff, understanding financial statements and translating financial needs into clinically relevant terms is essential.

Operations management: Experience managing clinical departments and support services such as quality assurance or clinical IT builds skills needed to administer complex coordination efforts.

Strategic management: With system success dependent on effective and efficient physician services, assessing community medical needs and opportunities and developing physician alignment strategies that meet them are necessary skills.

Quality & process improvement: Rethinking and redesigning care systems is essential to realize potential quality improvement and savings from integrated medical records and coordinating care outside the hospital.

Leadership development: The top clinical officer needs lieutenants in medical staff leadership, clinical departments, service lines and independent medical practices, so educating a corps of physician leaders is key.

Team leadership: Reinventing care is a multidisciplinary effort involving clinicians inside and outside the hospital.

Influence without direct control: Hospital boards, executive management and medical staff still control hospital operations. An effective CMO must exert influence without absolute control.