The growing influence of nonclinical actors in healthcare has sparked concerns among physicians, as many feel that their autonomy has been significantly eroded over the past few decades.
James Krantz, MD, family medicine physician at Frederick, Md.-based Catoctin Medical Group, joined Becker's to discuss how the involvement of nonclinical professionals in healthcare has grown to hurt physicians.
Why physicians sought out nonclinical actors
"The main source of erosion of physician autonomy is the entry of businesspeople into medicine, which we physicians facilitated several decades ago," he said. "In the '80s, we doctors wanted administrators — in private practice, many of us found we wanted to focus on medical work rather than accounting, so we hired these people to handle administrative tasks."
This arrangement worked well initially, as administrators were kept under physician authority and were "paid a reasonable rate."
What began as a means of streamlining administrative tasks has evolved into a system where business executives hold considerable power, Dr. Krantz said, often to the detriment of physicians and patient care.
"They began looking out for their own best interests, wanting to be the boss and make a lot of money," he said. "This has led to the current situation."
The rise of healthcare CEO pay
One of the starkest examples of this shift is seen in the skyrocketing pay of healthcare executives. The average annual salary of CEOs in the U.S. healthcare sector is $231,870, according to the most recent Bureau of Labor Statistics employment survey, with an average hourly wage of $111.48. The average yearly salary for the lowest 10% of earners among healthcare CEOs was $77,030.
Dr. Krantz said his pet peeve is the substantial salaries that hospital administrators earn, often in institutions heavily reliant on public funding.
"It's a travesty," he said. "Most hospitals are conservatively at least 80%, and many are 90% or more dependent on Medicare and Medicaid. Yet, we pay hospital administrators and their teams significant salaries."
Nonclinical influence on hospital boards
One key factor contributing to the rise in healthcare executive salaries is the increasing number of private-sector board members in hospitals. According to Lown Institute President Vikas Saini, MD, these individuals are "oriented to the bottom line" and think about hospitals "like a regular business," he said in an April 10 article from the Lown Institute.
A study published in the Journal of General Internal Medicine found that 44% of the board members of the hospitals that received top rankings from U.S. News & World Report come from the financial sector, while less than 15% were healthcare professionals, according to the report.