What Health Care Managers Need to Know, and How to Teach Them

Regina Herzlinger was the first woman to be promoted to full Professor at Harvard Business School. I took classes from her when I was a student there, although she was only an Associate Professor at that time. A recent article in the HBS Working Knowledge blog profiles some of her thinking on one of the areas where she is a recognized expert: health care.

Global health care is entering its most challenging era, with increasing demand for services from consumers newly arrived in the middle class, under-served people, and rapidly aging populations, all the while dealing with the need to manage advanced medical technology, transform core services to a digital platform, and the increased fiscal pressures created by the worldwide economic crisis.

Unfortunately, the educational programs for future health care leaders fail to provide many of the needed skills, according to a survey of CEOs of the world’s most innovative health care firms conducted by Professor Herzlinger.

On October 4-5, Herzlinger, the Nancy R. McPherson Professor of Business Administration, hosted the international conference, “Twenty-first Century Health Care Management Education: Confronting Challenges for Innovation with a Modern Curriculum.” The conference brought together 114 global faculty from schools of medicine, health care administration, public health, and business; leaders of the US professional societies; and HBS alums active in health care investing , leadership, entrepreneurship, and policy making.

“It was an exciting effort that joined health care administrators, policymakers, and academics in discussing how to strengthen management education in the health sector, with a special focus on innovation,” according to Herzlinger.

Though a white paper based on their deliberations is being prepared, Herzlinger sums up the conference findings this way: “The teaching of health care administration needs to be more imbued with holistic, real-world issues and teaching approaches: more case-based teaching and efforts to help students focus on strategic insights and business models; an enhanced focus on organizational innovation and implementation; and increased field-based learning.”

The diagnosis

As source material for the conference, Herzlinger arranged for market research firm Scriplogix to interview selected top executives known for innovation in this sector or as major employers of graduates of professional education programs. The survey assessed their views of the future, the core skills and knowledge needed by future leaders, and their assessment of how well current academic programs in the health sector prepare students for these challenges. Scriplogix also polled conference attendees about their views of what the future held and the impediments, if any, to fashioning curricula which could help students best address this future.

Concurrently, Herzlinger and conference coordinator Casey Covarrubias analyzed the course content of 26 of the leading schools offering specialized programs in health care management and compared the curriculum to the recommendations from the field interviews by comparing the frequency of words in syllabi with the major themes proposed by the CEO’s.

The results outlined the challenges ahead for academic programs in this field.

Although the academics and CEOs agreed that innovation was key, especially process innovation, the content analysis revealed significant differences in the words most frequently used by CEOs—innovation, leadership, management, and change—with those found most frequently in curricula descriptions—policy, system, and organization.

The terms often used in describing the business school curriculum—biomedical/biotechnology/diagnostic, entrepreneur, finance—differed from those in the public health business curricula—analysis, organization, policy.

And on the question about impediments to greater learning in this area, the academics generally cited shortage of faculty who understood health care and could teach business skills; lack of case materials and familiarity with case method teaching and field studies; and inadequate mechanisms for involvement of the local entrepreneurial health care community.

Specialized skills required

“Sure, health care managers must be able to read financial statements; to understand how leaders get things done; she has to be very smart about competitive analysis and forging a strategy that considers realities and which way public policy is moving,” Herzlinger says. “She must also understand capital markets, group dynamics, and different kinds of leadership.”

But in health care, Herzlinger continues, managers must also have the confidence and skill to analyze the viability of innovations in terms of their technological, public policy, and structural impact and to have a sure sense of the mood of consumers who, all over the world, are deeply interested in health care. “This is not a field for mile-wide, inch-deep managers. Health care innovators must master not only managerial skills but also the complex forces affecting the sector.”

One clear message emerging from the conference was the importance of change management. How are concepts underlying organizational innovation implemented and how are leaders developed with the capacity and courage to effect these changes?

Another message, according to Herzlinger, was about the role of payment models on cost, quality, and access to care and the need to ensure that “access” does not require “affluence.” And , while most organizations claim they are focused on the patient, few actually engage them in meaningful ways to help with prevention and wellness, shared decision making, provider choice, expectation setting ,and compliance.

The problem is that practical skills such as cost accounting and organizational behavior are taught today often in narrow silos and slices, lacking a grounding in practice. “A more holistic approach would bring together disparate skill sets in a very practical way, thinking about strategies and how to actually effect change in health care,” she says.

Another limitation Herzlinger sees is a focus within the curriculum on the needs of hospitals rather than a more holistic view of the sector. “We need [talented managers in] hospices and retail clinics and nursing homes and skilled nursing facilities and biotech, medical devices, and health IT. Further, this focus on individual institutions as sites of care can miss significant opportunities to address systems of care issues so critical to the treatment of patients with chronic conditions.”

If curricula are a significant problem, they often reflect limitations in the ability of faculty to address the novel elements of the required knowledge and skills. Academic programs often provide few rewards for teaching faculty and those focusing on applied research. Where programs have specialized faculty slots available for the health sector, few recognize the disconnect between the research that is rewarded in academic tracks and the critical needs of the health care sector. Herzlinger hopes that the conference will springboard the recognition of teachers who create holistic curricula focused on strategy and innovation within the sector.

“That would not be a minor result; it’s a huge academic achievement. From the perspective of the needs of these programs, the fact that someone hasn’t published in a prestigious economic journal is just not that relevant. We must legitimize that concept among our peer institutions.”

From its original conception, Herzlinger knew that the conference needed to be global in scope. “As GDP rises, the demand for health care increases. I was very concerned that students from developing nations would be taught to simply replicate the failures of the American and European systems.” In addition, she does not believe that the developed world has all the answers. International case studies in her own popular HBS MBA courses on Innovating in Health Care have shown that necessity was not only the mother of invention, but innovation as well. “If you live in India and you can spend $50 per person per year on health care—as opposed to $8,000 for us—you think creatively about how to get it done.”

Next steps

Herzlinger is not naive about how easy it will be to enact the conferees’ recommendations in the larger academic world. “Our point of view will not be credible unless this group acts to make it credible. It needs to be legitimized as a means to make health care better, more accessible, more uniform in quality, and more cost-controlled. This mission also requires resources. Development of faculty and curricular material such as case studies is very expensive.”

The conference is envisioned as the first of a series. Future events will monitor the implementation of the recommendations in the white paper, with Professor Kevin Schulman of Duke University hosting the next event. “We also need to take it abroad to a not-very-big European country, China, South America, Africa; to make sure that this conference, in how it is held and managed, embodies the goals of the endeavor-to create the academic programs preparing the new leaders for this field.”

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