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Business-Success Literature and the Health Care Enterprise: The Need to Test “Insights”

Kuo, Paul C. MD, MBA

doi: 10.1097/ACM.0b013e3181e19354
Letters to the Editor

Chief of general surgery and vice-chair for research, Department of Surgery, Duke University Medical Center, Durham, North Carolina;

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To the Editor:

Health care delivery is a complex and competitive business. To help meet its challenges, management commonly espouses principles from best-selling business-success literature. However, if viewed through the lens with which we view our medical literature, are the “insights” from business-success literature always reliable predictors of success? Or are they sometimes overstated, unvalidated claims or, even if valid in certain contexts, not valid in health care? Before health care leaders parrot the catchphrases or apply the principles of these best sellers to the business of health care, perhaps they should closely examine these insights.

An example of this genre, Built to Last by Collins and Porras, in continuous publication since 1994, is a “must read” for CEOs and is listed as one of the best business books.1 The authors claim to determine the characteristics associated with business longevity using a case-control, retrospective study comparing 18 “successful, visionary” corporations with 18 “unsuccessful” corporations. Their findings rest on a large set of data, yet my investigations convince me that much of the data are biased, dependent on performance, and not prospectively validated. So, with their Big Hairy Audacious Goal (BHAG), would a health care enterprise be guaranteed success? In scientific literature, claims to the importance of the BHAG would constitute confusion of correlation with causation. Yet, the BHAG is commonly bantered about as a buzzword connoting success.

In contrast, other business-success models have been more rigorously analyzed2,3 and have been helpful when applied to health care. An example is the performance-based compensation (PBC) model. The goal of PBC is to ensure that employees are compensated for their efforts. A portion of the salary is put at risk, allowing total compensation to fluctuate depending on revenues generated by the individual, either through clinical practice or through research funding.2 A number of academic medical centers that have implemented this plan report improved faculty work satisfaction. In addition, the plan has resulted in increased clinical and research revenues for the departments3 and higher median faculty salaries.

In summary, the business-success gurus are frequently accused of biased evidence, circular reasoning, and statistical errors.4 This should alert leaders in the health care industry to be equally critical when a business-success principle becomes fashionable, and to use a scientific approach to determine value.

Paul C. Kuo, MD, MBA

Chief of general surgery and vice-chair for research, Department of Surgery, Duke University Medical Center, Durham, North Carolina;

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1 Reingold J, Underwood R. Was Built to Last built to last? Available at: Accessed March 23, 2010.
2 Tarquinio GT, Dittus RS, Byrne DW, Kaiser A, Neilson EG. Effects of performance-based compensation and faculty track on the clinical activity, research, portfolio, and teaching mission of a large academic department of medicine. Acad Med. 2003;78:690–701.
3 Reece EA, Nugent O, Wheeler RP, Smith CW, Hough AJ, Winter C. Adapting industry-style business model to academia in a system of performance-based incentive compensation. Acad Med. 2008;83:76–84.
4 Bennett D. The seven secrets of really really lucky companies. Available at: Accessed October 10, 2009 [no longer available].
© 2010 Association of American Medical Colleges