Does physician leadership affect hospital quality, operational efficiency, and financial performance?

Background: With payers and policymakers' focus on improving the value (health outcomes achieved per health care dollar spent) of health care delivery, physicians are increasingly taking on senior leadership/management positions in health care organizations (Carsen & Xia, 2006). Little research has been done to understand the impact of physician leadership on the delivery of care.

Purpose: The aim of this study was to examine whether hospital systems led by physicians were associated with better U.S. News and World Report (USNWR) quality ratings, financial performance, and operating efficiency as compared with those led by nonphysician managers.

Methodology: Cross-sectional analysis of nationally representative data from Medicare Cost Reports and the USNWR on the 115 largest U.S. hospitals was performed. Bivariate analysis of physician-led and non-physician-led hospital networks included three categories: USNWR quality ratings, hospital volume, and financial performance. Multivariate analysis of hospital leadership, percent operating margin, inpatient days per hospital bed, and average quality rating was subsequently performed.

Results: Hospitals in physician-led hospital systems had higher quality ratings across all specialties and more inpatient days per hospital bed than did non-physician-led hospitals; however, there were no differences in the total revenue or profit margins between the groups. Physician leadership was independently associated with higher average quality ratings and inpatient days per bed.

Conclusions: Large hospital systems led by physicians in 2015 received higher USNWR ratings and bed usage rates than did hospitals led by nonphysicians, with no differences in financial performance. This study suggests that physician leaders may possess skills, qualities, or management approaches that positively affect hospital quality and the value of care delivered.

Practice Implications: Hospital quality and efficiency ratings vary significantly and can impact consumer decisions. Hospital systems may benefit from the presence of physician leadership to improve the quality and efficiency of care delivered to patients. In addition, medical education should help prepare physicians to take on leadership roles in hospitals and health systems.