Not all MDs take a detour in medical school for graduate business training; however, you don’t need an MBA to learn about the business of medicine. There are myriad ways to apply business school pearls to health care and, more specifically, to ophthalmology. This article reviews some key takeaways from my business training that may be useful for other emerging ophthalmologists.
Discount cash flow (DCF) analysis may seem like just an academic concept from finance textbooks, but DCF can be relevant to health care, especially when considering emerging therapeutics. Essentially, discounting is the process of adjusting the value of an asset in the future or factoring in the time value of money. Given our expectations about future inflation or the opportunity cost of current investments, we typically value a dollar today at more than a dollar tomorrow. Why does this matter for doctors? In one study, my coinvestigators and I found that DCF can be used to rigorously value new, one-time therapeutics for chronic issues, such as gene therapy for neovascular age-related macular degeneration.1 As gene therapy and other curative approaches for chronic diseases are developed, it will become critical for policymakers and systems to grasp the quantitative personal and societal value of new therapeutics.
Accounting may be deemed a boring bean-counting exercise by some, but it is extremely important in health care for determining the true cost of the provision of care. For example, with time-driven, activity-based costing,2 my coinvestigators and I found that the costs of routine vitrectomy significantly outweigh Medicare reimbursement.3 Having a basic grasp of accounting methods (and comparing the contribution margin4 of clinical procedures) can help us ensure the economic feasibility of medical care.
MARKET DYNAMICS AND ORGANIZATIONAL VISION
An increase in the total number of ophthalmologists may not lead to more patients receiving necessary eye care.5 In medical school, I had the fortune of rotating at Aravind Eye Hospital in India, where ophthalmologists set up cataract and refractive error screening camps in rural areas to address preventable blindness. Aravind’s model shows how employing business fundamentals such as lean management and organizational design can make a significant impact on providers’ ability to reach patients. Mehta and Shenoy’s Infinite Vision6 is a terrific read for those unfamiliar with the Aravind story and model.
We tend to focus on clinical and surgical acumen in training, but the amount of time spent in the waiting room is often patients’ biggest concern. Queuing theory, Little’s Law, supply chain management, and project management may seem like abstract concepts, but a simple Gantt chart for an ophthalmology clinic can reveal various intervenable bottlenecks. Such simple operational issues were fundamental barriers during the COVID-19 pandemic.7 The classic business school required reading The Goal by Goldratt and Cox8 is an old but still relevant introduction to operations that may help budding ophthalmologists develop efficiencies in their practices.
The argument for differentiating leadership and management is complex, but the intention and need for targeted leadership development is not. Leadership development programs are foundational in ophthalmology.9 Residents and fellows should be intentional about their personal development and pursue institutional, national, or societal leadership development programs that are designed to grow the next generation of leaders in ophthalmology.
1. Berkowitz ST, Patel S. Value of anti-VEGF gene therapy for neovascular age-related macular degeneration. Ophthalmol Retina. 2021;5(4):357-364.
2. Kaplan RS, Porter ME. How to solve the cost crisis in health care. Harv Bus Rev. 2011;89(9):46-52, 54, 56-61 passim.
3. Berkowitz ST, Sternberg P, Patel S. Cost analysis of routine vitrectomy surgery. Ophthalmol Retina. 2021;5(6):496-502.
4. Contribution margin definition. Investopedia. December, 22, 2020. Accessed August 27, 2021. https://www.investopedia.com/terms/c/contributionmargin.asp
5. Berkowitz ST, Liu Y, Chen Q, Patel S. Correlation between ophthalmology market saturation and medicare utilization rates. Am J Ophthalmol. 2021;229:137-144.
6. Mehta P, Shenoy S. Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion. Berrett-Koehler Publishers; 2011.
7. Patrinely JR, Zakria D, Berkowitz ST, Johnson DB, Totten DJ. COVID-19: the emerging role of medical student involvement. Med Sci Educ. 2020;30(4):1641-1643.
8. Goldratt EM, Cox J. The Goal: A Process of Ongoing Improvement. Routledge; 2016.
9. Berkowitz ST, Law JC, Sternberg Jr P, Patel S. Leadership development in ophthalmology: current impact and future needs. J Acad Ophthalmol. 2021;13(01):e32-e39.