Surgeons and Administrators Co-creating Value : Annals of Surgery

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Surgeons and Administrators Co-creating Value

Nurok, Michael MBChB, PhD; Sundt, Thoralf M. MD; Kaplan, Robert S. PhD; Gewertz, Bruce L. MD§

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doi: 10.1097/SLA.0000000000005183
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Public and private health care payers are replacing their traditional fee-for-service payments with value-based approaches such as accountable care organizations and bundled payments. These approaches create strong incentives for hospitals to reduce their costs without affecting the quality of their services. Neither of these goals, however, can be achieved without more strategic and deliberate partnerships between administrators and clinicians, particularly surgeons, interventionalists, and perioperative physicians whose work relies on a large portion of hospital materiel and human resources.

Most hospitals have arms-length relationships with physicians’ organizations. These arrangements exist, ostensibly, to ensure physician independence from health care systems, and to prevent financially incentivized hospitals from having an undue influence on the care that physicians provide to patients.1 Hospital administrators often view physicians as people they must “manage,” not as potentially valuable strategic partners.2 Admittedly, physicians are notoriously independent and may not be inclined or may be lacking in the financial acumen to foster collaborative relationships with hospital administrators who they often view as disconnected from the realities of bedside care. Interactions between administrators and clinicians tend to be reactive and episodic, activated in response to budget shortfalls, revised contract demands from a payer, or a physician's desire for programmatic investment.1 Perpetuating these episodic and constrained interactions between caregivers and administrators may make it difficult to achieve the twin value-based healthcare imperatives of better patient outcomes and lower total costs.3

Surgeons, interventionalists, and perioperative physicians make clinical decisions every day that have great influence on both patient outcomes and hospital costs. Take, for example, the relatively new percutaneous trans-catheter aortic valve replacement (TAVR), that enables a patient to be sent home within 24 hours of the procedure. In contrast, the traditional surgical aortic valve replacement (SAVR) requires a 5 –7-day hospital stay after the operation. Current medical evidence indicates that, for many patients, the outcomes are the same, and that TAVR is preferred for high-risk patients.

The valve used in the TAVR procedure is far more expensive than the valve implanted surgically but this higher “up front” cost is more than offset by lower hospital costs; it is well documented that TAVR's have shorter lengths of stay and lower ICU days. The application of this option, however, depends both on the clinician's judgement and interaction with the patient, and the hospital's investment in the necessary technology to provide TAVRs. The lack of dialogue between clinicians and hospital administrators can prevent the benefits from TAVR and other nonoperative therapies being translated into actual cost savings and new revenue opportunities. For example, loss of SAVR volume may free capacity of OR staff and beds to expand another service line, such as liver transplantation, that requires extensive use of those same resources. Growing resource-intensive clinical services can’t happen without collaborative planning by administrators and clinicians to, for example, recruit additional surgeons and anesthesiologists and reconfigure surgical time slots. In addition, given the higher volume of transcatheter valves, administrators could negotiate lower purchase prices with suppliers and introduce vendor risk-sharing.

So why aren’t clinicians at the table creating strategic plans with administrators? Often, they are not invited. But another reason can be traced to the outdated “accountability principle” in management. Under this precept, individuals are held accountable only for resources and outcomes that they directly control. In the health care context, the accountability principle holds procedural physicians such as surgeons and interventionalists responsible only for their performance in operating rooms and interventional suites; resources that they directly control. Administrators are held responsible only for operations and finances in their area of oversight. But when proceduralists focus on both upstream and downstream components of the surgical episode, both outcomes and cost improve, and administrators can better match resources to care needs. Outcomes related to resources beyond those immediately controlled exist in what management scholars call an “entrepreneurial gap”. Entrepreneurs close this gap by pursuing opportunities — internally and externally — to influence the use of resources beyond those they currently control. Of course, such entrepreneurial activity adds to a clinician's administrative burden and the clinician may eventually judge that the extra effort outweighs the potential benefits. The most skilled entrepreneurs enable others to see the importance of collaboration, which allows the added administrative load to be shared among several people.

The current focus on perioperative care illustrates how anesthesiologists, surgeons, and their respective administrators can close entrepreneurial gaps by extending their influence beyond the operating room to encompass the entire arc of care both before and after surgery. They collaborate with patients, primary care physicians, specialists, physiotherapists, rehabilitation facilities, and insurance companies to optimize patient's condition before surgery and the care patients receive post-surgery. This engagement increases the likelihood of better patient outcomes and effective use of health care resources.4

Collaboration among health care system administrators, and clinicians to improve outcomes and lower treatment costs also enables sustainable cost reductions. Currently, hospital executives attempt to cut costs with what may seem arbitrary staff reductions and restrictions on the use of new, expensive drugs and devices, even those which may be more effective. “Head-count” reductions often target the hospitals’ lowest paid personnel but leave the work they performed intact and shifted to highly compensated physicians and nurses.5

Studies have shown that when hospitals lay off apparently non-essential personnel, physicians spend more time on clerical, administrative, and other nonprofessional tasks. A 2016 study showed that nearly 50% of doctors’ time was spent updating electronic medical records, and on other clerical and desk work, with direct face time with patients accounting for less than a third of each day.6 The increased administrative burden has demoralized clinicians and contributed to physician burnout. It also causes clinical schedules to be backed up, with unhappy patients spending more time in the waiting room. Yet, clinicians are rarely invited to participate in the personnel decisions that worsen the quality of their practice and their patients’ experiences. Preferably, administrators and clinicians should jointly determine the ratio of support staff-to-clinicians for an optimal balance between cost and physician workload.

Of course, clinicians – including advanced practice providers, nurses, pharmacists, physical therapists, and social workers – are not the only groups with whom hospitals can co-create value. Interdisciplinary team-based decision making is essential in value driven approaches to care delivery. The same can be said of relationships with patients, payers, and suppliers. Engaging patients can extend beyond just improving their experience and satisfaction. They are the source for patient-reported outcomes, and also have valuable opinions about the direction their hospital is taking, both personally and for their community. Payers – both patients and insurance companies - must also be viewed as partners in co-creating value with hospitals, and not simply function as the entities from whom fees are collected. And suppliers are increasingly interested in taking on risk to deliver value to patients with their products.7

Health care systems must recognize that input from their stakeholders– especially surgeons, interventionalists, anesthesiologists, and other perioperative physicians - can contribute to their organization's success. We suggest the following changes. First, hospitals should create regular forums with clinicians and administrators aimed at jointly reviewing strategy. Second, frequent, transparent, and organized processes should be adopted to permit clinicians to have input into resource allocation aimed at improving outcomes and lowering costs. These efforts take physicians time, and this time should be appropriately valued and protected. Third, administrators should regularly join clinical activities to develop appreciation for the work and challenges experienced by both patients and caregivers. Administrators and clinicians have different cultural backgrounds. More intensive interactions between them, focused on improving patients’ clinical experiences while reducing total costs of care, will produce greater understanding between the two groups and help to positively transform and unite the organization's culture.8,9 Collaboration skills are now formally taught to physicians who enroll in leadership programs. Finally, both clinicians and administrators should be held jointly accountable for the organization's financial health and clinical outcomes. Administrators will then want to encourage clinician-driven entrepreneurial activity, and clinicians will accept financial accountability for the additional resources to which they now have access. The new collaborations and accountability are necessary to create sustainable innovations that improve patient outcomes and lower societal health care costs.


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1Many administrators are former clinicians. In our experience simply having a former clinician in an administrative role helps but is generally insufficient to overcome the pitfalls described here. We have encountered both excellent non-clinician administrators, who work hard to understand physician's day to day challenges, and poor clinician administrators, who, in their new responsibilities, become less interested in suggestions from bedside clinicians.


Co-creating value; collaboration; healthcare administration; healthcare management; strategy

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