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Spring 2015

Lack of Succession Planning: Problem or Symptom

Jody Locke, MA
Vice President of Anesthesia and Pain Practice Management Services, Anesthesia Business Consultants, Jackson, MI

What is your succession plan? Oh, you don’t have one! Why not? Maybe you don’t think you need one. Or maybe you figure you will manage a change in leadership the way you manage anesthesia in the Operating Room; when the need arises you will figure it out. If this describes your practice you are not alone. If so, it may be time to think about what this says about your practice.

The Significance of a Strong Leader

The reality of most private practice anesthesia groups is that the strength of the contract with the hospital or facility depends heavily on the relationship between a key member of the practice and the administration. This can be a good thing when the leader speaks for the interests of the membership but what happens when he or she steps down? It is an unknown, but this is an inevitable development for every practice. It is curious that so little thought is given to the potential repercussions. Maybe, though, this is simply a reflection of a culture that prides itself on having the shortest decision cycle in medicine. Is there any clinical challenge that anesthesia provider cannot address and resolve in a matter of seconds? Unfortunately you cannot manage a practice the way you manage a patient through an anesthetic, although there are some interesting and relevant parallels.

How significant an issue is this? The evidence is both anecdotal and statistical. It is not hard to identify practices where the glue that held the members together and kept the hospital happy is a leader more focused on the future of the practice than the financial expectations of individual members.

The following example is illustrative. It is not enough to suggest or assume that a given physician will be the successor. Leaders must earn the right to run a practice and as in political races, the vetting process can be very unpredictable. A large anesthesia practice in California recently experienced this firsthand. A hand-picked executive committee of young physicians was voted out by the membership in a dramatic statement of non-confidence. Why did this happen? What went wrong? Unlike the group’s founders, the new leaders used their position for personal gain. Cynics will argue this is what happens when we make assumptions; by assuming the young physicians were good physicians and that they were focused on the future of the practice the group made a huge tactical mistake. The reality is that it is virtually impossible to groom the next generation of leaders without making a significant investment of time to prepare candidates for the mantle of leadership.

One can argue, as many group members often do, that the problem is financial. If a practice does not value leadership in a way that results in fair compensation for those who assume responsibility, then there is little incentive for an individual physician to assume the risks and responsibilities of management. It is curious that so many groups would rather pay a non-physician to manage the practice than create meaningful incentives for a shareholder or partner to assume a position of responsibility.

But the phenomenon has far reaching implications. With increasing frequency anesthesia practices are failing. This failure may take various forms. In some cases the group simply cannot come to terms with the hospital with regard to the cost of meeting the facility’s coverage requirements, and eventually the shareholders throw in the towel. In others the hospital simply becomes frustrated with the group’s inability to restructure itself, especially if the administration’s expectation is that the group should change its delivery model from physician-only to an anesthesia care team. It used to be that few anesthesiologists knew what an RFP was, but now most know that a Request for Proposal is tantamount to a vote of no confidence and have come to understand that its use has changed the nature of contractual relationships with hospitals from one of collegiality to competition. And so we track the promulgation of such requests as a barometer of the changing nature of the specialty. It is no longer enough to provide consistently high quality care if customer service metrics are compromised by the behavior of a few.

The Culture of Anesthesia Practices

How much of this is a function of lack of leadership and how much is this a function of a culture that does not view succession planning as a priority? The two are integrally intertwined. Absent a culture and commitment to growing, training and supporting tomorrow’s leaders, there will be few leaders willing to take up the challenge. It is the rare practice where younger members don’t look at the leader’s schedule and commitment of time only to conclude that this is not for me. And the problem is that when someone does express interest in leadership the other members are often suspicious of his or her motives.

Values matter. Each group has evolved a specific and unique culture. It is this culture that holds the individual members together, however loosely. Given the history of most anesthesia practices, which is a history of individuals bringing their practices together to form affiliations and group practices, there is often an implicit expectation that the best practice, like the best government, is the one that imposes the fewest restrictions on the activities of the individual. Most anesthesia practices are more accurately described as professional fraternal organizations than as true group practices, in the business sense. The reality is that for hospital-based practices very little of the actual business risk is shared. Anesthesia practices typically have the lowest percentage of overhead (about eight to ten percent) of any medical specialty. Most anesthesia providers would prefer their practice to simply provide a very limited scope of management services that include billing, contracting and scheduling. A former Oregon Anesthesiology Group president once observed, “What is it about anesthesiologists that they have such a pathological fixation with overhead?”

Management versus Leadership

Management consultants make a distinction between leadership and management. Leaders provide the vision while managers make things happen. Leaders are those individuals focused on what could be, while managers deal with what is. Leaders should inspire the exploration of new ideas and concepts, while managers strive to maintain the status quo. Leaders are born with a passion to lead, managers are not. It should come as no surprise to anyone who is familiar with anesthesia practices that most groups tend to prefer good managers to leaders. In fact, it is the rare practice that knows visionary leadership because this is by design.

If healthcare were static and if hospitals, surgeons and patients were only focused on consistently good clinical outcomes and not on customer service, the old model might well still work, but the fact is that anesthesiologists can no longer hide behind the vapor barrier. Today’s customers understand that anesthesia has more and better data than any other department in the hospital. As the competition for surgeons’ cases increases anesthesia must play more of an active role in partnering with the facility. They must become part of the solution, and not be seen as part of the problem.

Essential Requirements of Succession Planning

Succession planning speaks to three fundamental questions. How does the organization identify a leader with the requisite skills and commitment? How does the organization ensure that the leader has been prepared adequately for the responsibilities associated with management? And then, when the leader decides to pass the baton and step back into the rank and file, how does the organization ensure continuity of focus and management? Underlying each response are the implicit values that have guided the organization’s development. Strategic planners are quick to point out that the beliefs and strategies that have gotten the organization to where it is today are unlikely to ensure its ongoing success in a dynamic environment.

The short answer is that most practices are lucky when a qualified successor takes over. More often, though, the retirement of a qualified and competent leader undermines the security and viability of the practice and its franchise for anesthesia services. In effect, the typical practice operates more at the sway of its circumstances rather than in control of them. This is no doubt another historical legacy of the specialty’s early days. Anesthesia is, after all, the original service specialty. Virtually every other stakeholder in the hospital has more impact on the income and lifestyle of the anesthesia provider than the group’s leadership, although this is starting to change.

Useful Options

The preparation of physicians for positions of leadership is starting to change, at least in the more forward-thinking practices. The ASA has been a significant and contributing factor in this area. 1994 was a seminal year for anesthesia practice management when the ASA launched its first practice management conference in Phoenix. This meeting, which is held each January, has become one of the more important meetings of the year. It provides an excellent forum for the discussion of management issues and trends. A newer option, the Advanced Institute for Anesthesia Practice Management, is offered every April.

The ASA Certificate of Business Administration (CBA) program held in Houston each year represents another approach and provides anesthesiologists a unique opportunity to discuss the business of medicine. It is clearly not an MBA program, but the next best thing.

It is also true that a growing number of anesthesiologists are signing up for MBA programs. Clearly, many see the handwriting on the wall. They understand that their success or failure in anesthesia will have less to do with their clinical training and skills and more to do with their understanding of basic business issues.

The Only Constant in Healthcare is Change

Despite all these positive developments, group culture is slow to change. In some ways the growing interest of individuals in better understanding the economics of healthcare is a reflection of their frustration with their practices and leadership. While one would love to believe that these individuals will bring their knowledge and insights back to their groups, in too many cases they decide to pursue their own interests elsewhere.

There are many lessons to be learned from the experience of today’s anesthesia practices. There are so many exciting models to emulate: practices that have taken control of their own destiny and negotiated much strong positions. There are also lessons to be learned from those practices that have been taken over by hospitals, fallen victim to RFPs or sold out to larger entities. There will always be a need for anesthesia so long as there are patients undergoing surgery. The question is how this care gets delivered. Those who are willing to consider alternatives and reinvent their organizational model usually find a way to survive. Success, however, is always a function of vision and innovation. Most problems have solutions if you are willing to look for them.

One of the ironies of anesthesia is that while it is the specialty where providers must deal with the most unknowns in the most efficient manner, as a category, anesthesia providers tend to be some of the most risk averse individuals imaginable. I once asked an anesthesiologist if anesthesia were art or science. The response was simply, “yes.” There is something very personal about the act of administering anesthesia. Each case is a unique creation in the unique crucible of experience that blends the surgeon’s requirements with the specific demands of the procedure and the expectations of the patient. It takes a very special set of character traits to be consistently successful. Anesthesiologists are a special breed, which is what makes them so good at managing complicated situations. This may impact their thinking about succession planning. They tend to not take on things they cannot control. They definitely like to know the ending before they start. Those of us who know a little bit about their training understand that while they may appear to make decisions spontaneously in the operating room, they are actually playing out routines that have been studied and rehearsed hundreds of times. In this sense they are completely unprepared both for the concept of succession planning and the notion of taking responsibility for the actions of others. It is a particular challenge for which they have not been prepared, but fortunately it is one they could master with the same attention to detail and persistence that made them good physicians. As is so often true in today’s medical environment, it is the things for which we are least prepared that may have the greatest impact on our future. If there is one thing we have learned from the specialty it is the preparation for the case that has the greatest impact on the outcome. So it is with planning for the future.

Jody Locke, MA serves as Vice President of Anesthesia and Pain Practice Management for ABC. Mr. Locke is responsible for the scope and focus of services provided to ABC’s largest clients. He is also responsible for oversight and management of the company’s pain management billing team. He will be a key executive contact for the group should it enter into a contract for services with ABC. Mr. Locke can be reached at