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Health care executive Jeffry A. Peters discusses his article “Ending physicians’ addiction to unhappiness,” focusing on the systemic factors fueling widespread dissatisfaction among doctors. Jeffry outlines how declining reimbursement, increased patient volume, and reduced support staff have turned physicians into disempowered production workers. He offers a blueprint for reversing this trend by creating a culture where physicians feel valued, supported, and heard. Key solutions include competitive compensation, flexible schedules, shared governance, and leadership opportunities. Jeffry emphasizes that health systems that prioritize physician well-being and empowerment will gain a sustainable competitive advantage in recruitment, retention, and quality care delivery.
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Transcript
Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast. Today we welcome Jeffry A. Peters. He is a health care executive, and today’s KevinMD article is “Ending physicians’ addiction to unhappiness.” Jeffry, welcome to the show.
Jeffry A. Peters: Well, thank you very much. I really appreciate the opportunity to be here.
Kevin Pho: All right, so just tell us briefly about your story and then talk about the KevinMD article that you shared with us.
Jeffry A. Peters: Yeah. I think I’ve always worked in health care at the intersection between physicians and health systems. Probably my first endeavor in the health care field after graduate school was helping what’s now part of the University of Chicago break into a new market where they had virtually less than 1 percent market share.
So this is 40 years ago—much different than today. We built ambulatory care centers, and what was very unique then is we began to employ non-academic physicians and link them to the health system. By building ambulatory care centers with urgent aid and physicians’ offices, we were able to take their market share from zero to 20 percent. It’s sustained itself, and it generates about a hundred million dollars in incremental EBITDA for the bottom line. So I’ve been very interested my entire career in physicians and how health systems successfully work with them.
Kevin Pho: All right, and you wrote your KevinMD article “Ending physicians’ addiction to unhappiness.” Obviously, with that intersection between health systems and physicians, you have a front-row view of physician morale and some of the obstacles physicians face today. So tell us what led you to write this article, and then, for those who did not get a chance to read it, tell us about the article itself.
Jeffry A. Peters: Yeah, well, my husband is a physician, and not to be trite, a lot of our friends are physicians. What strikes me is when we get together to have dinner or just to socialize, Kevin—something you hear all the time—they complain about how awful it is to practice medicine today. The reimbursement is dropping, there are greater burdens on them in their practice, and they can’t believe they chose this as a profession.
So I think there’s a high degree of unhappiness among physicians. It’s why 40 percent of all physicians are looking to change positions in the next two years, and the response—because the majority of physicians, particularly in primary care like you, Kevin, are employed—is that the health system puts greater demands on that physician to see more patients. Rather than having an LPN or a nurse to assist them, they might only have a medical assistant, which doesn’t provide enough support, and they feel like they’re hamsters on a wheel. They’re just not happy.
Physicians are so vitally important to all of our lives. They’re there at the most critical points in our lives. So if we want to make health care better, we need to improve physician satisfaction and happiness, because there’s a direct correlation between physician satisfaction and patient outcomes.
Kevin Pho: Oh, I’m so happy that you said that, because that is a correlation that I always emphasize whenever this topic comes up. Now, whenever you meet physicians—whether it’s in a social setting or whatnot—and they have these complaints about revenue, decreased reimbursement, and so on, are they justified to complain? Do they have legitimate reasons why they’re unhappy?
Jeffry A. Peters: I don’t think there’s any question that there are legitimate reasons. Physicians are very well-trained. They sacrificed a lot of their lives to get their training, and there are people who really don’t understand the patient care experience trying to tell physicians like you how to practice and what to do. They’re relegated to employees with no voice, and that doesn’t work in any setting.
Yes, I think we’ve created an environment—particularly within the hospital-insurance-employed-physician sector—where we’ve taken away physicians’ ability to care for their patients and self-actualize.
Kevin Pho: How did it get to this point? When it comes to taking away that physician autonomy—knowing that, as you said, physician satisfaction is correlated with patient outcomes—how did we get here?
Jeffry A. Peters: Yeah, so I’ve been a hospital CEO; I’ve been in the executive suite. The pressure in the executive suite from the board is to improve the bottom line. It’s not necessarily to have better outcomes or a more satisfied workforce. It’s “Have you grown the enterprise’s revenue, and have you grown our cash reserves?” The people making decisions are not focused on what drives physician behavior and, in my opinion, better patient care. Ultimately, that’s a failure of the system. But I think there are answers.
Kevin Pho: Now, are you saying that there is no long-term correlation between better patient outcomes and increased revenue? Aren’t some of the ways that hospitals are paid based on patient outcomes?
Jeffry A. Peters: A very small percent. So it might affect 1 or 2 percent. I think hospitals are aware of those outcomes and are working toward those outcomes, but they’re working toward that metric, not the underlying tension that, in my opinion, would solve problems. And making money isn’t bad—it allows us to invest in technology, it allows us to build facilities in closer access to patients. Nobody is saying that hospitals and health systems shouldn’t make money. I just think part of the formula—and actually the sustainable competitive advantage for health systems—is creating an environment where physicians feel valued and appreciated.
If you create that environment, you’re going to see exponential returns in terms of patient satisfaction, clinical outcomes, and financial performance. I just think that’s part of the formula that health care executives don’t always exercise.
Kevin Pho: And how did you come to that realization? Because, as you said, there’s a lot of pressure on hospital CEOs and the executive team to maximize revenue, and sometimes clinician satisfaction doesn’t factor into that equation. How did you conclude that physician satisfaction matters?
Jeffry A. Peters: Because the majority of my work has been with physicians, and obviously when I’m at home, I’m talking to a physician. What I found is that when I paid attention to what physicians wanted—and gave it to them—everything improved. It’s as basic as: You’re a primary care physician, you should have a say in who your office manager is. You should have a say in how your practice operates—what your schedule is, how many patients you see—all of those important issues. We need to put physicians in a governance and decision-making body.
I’ve seen that where, nationally, we’re losing over two hundred thousand dollars per employed physician. I worked with one system where we put a group of physician leaders together. The board said, “We need to get this loss down by fifty thousand dollars per physician by the end of the year, and if we exceed that loss (meaning we do better), we’ll share that with all of you. We’ll give you some analytical support, some consulting support—but you decide how many physicians we need, how we structure compensation, how we organize the practice.” And lo and behold, in 12 months, they dropped the loss by 50 percent, and patient satisfaction and clinical outcomes increased.
I don’t think it’s magical. Physicians are really bright; if you put them in a position of governance and decision making, they make the right decisions. We just need to trust them to do that.
Kevin Pho: And why aren’t more medical institutions doing what you say? How common is it to have that physician empowerment and governance? Would you say it’s a growing trend, or do you still see friction toward that approach?
Jeffry A. Peters: Yeah, I don’t think there’s one description that fits all. Increasingly, what we’re seeing is presidents of health systems being physicians with a clinical background. For instance, a physician leader out of Brigham, Women’s, and Children’s took the helm in Vermont. Physicians in leadership get it, and they’re able to put other physicians in power. But it’s not uniform. There are still issues of control—”I’m the CEO, and I know better than anyone else.” But if you’re going to make change and if you’re going to make improvements, you’ve got to empower physicians, and you’ve got to create an environment where physicians feel valued and appreciated.
Kevin Pho: Now, in terms of next steps, how does one go about changing that organizational culture to give physicians some of that autonomy we’re talking about?
Jeffry A. Peters: I think it starts with having honest conversations with the entire physician group: “Our reimbursement is dropping; it’s going to drop further in the next two years. We’ve got financial pressures, and we can’t afford to lose two hundred fifty thousand dollars per employed physician. We want you to be part of the solution, and we’d like your thoughts on creating a governance structure—a physician board, for lack of a better word—to guide our employed physician group. We’d like to talk to you about what the makeup should be, what you’re looking for, and we’ll give you the analytical and practice management support. We’ll give you people who’ll help come up with ideas, but we want you to make the decisions, and we want to break down the barriers.”
But you can’t just have physician governance at the top. Physicians also have to have a say in how their individual practice works—in their pod—because physicians relate to their pod and who they work with on a daily basis. We also want to change the compensation. So if you’re successful in improving clinical outcomes, patient satisfaction, and financial performance, you’ll be rewarded financially—because you can’t make effective change unless the financial incentives are aligned. But we want to do that with you. It takes a lot longer to create this structure, but it’s sustainable and gets better results.
Kevin Pho: So take us behind the scenes when it comes to these board meetings and executive meetings where there is an emphasis on improving hospital revenue. Is there any physician voice in those meetings?
Jeffry A. Peters: In a majority of cases, yes—every hospital has a chief medical officer. Increasingly, hospital boards are involving chairs of key departments—internal medicine, surgery—in those meetings. So once the topic is introduced, you’re going to get physicians in leadership who say, “I agree with that. I think it makes total sense, and I think there’s a model.” I think physician-owned multispecialty group practices do better than hospital-owned multispecialty practices, and I think the reason is the financial incentives are aligned and physicians are in a decision-making position. We don’t have to create a new model—there’s a model that’s been successful for decades. We just need to duplicate that physician-owned group practice in a health system–owned group practice, and you’ll get overwhelming support from physicians. You’ll see fewer physicians leaving, more physicians delaying retirement, and as the culture builds, physicians will encourage other physicians to join. It’s not going to be utopia, but I think there’ll be improvements, and I’ve seen it in multiple organizations.
Kevin Pho: Tell us a story of one of those success stories, those improvements, where you suggested or saw some of the changes we’re talking about today, and it really improved physician morale so they can, as you say, end their addiction to unhappiness. Give us a success story.
Jeffry A. Peters: Yeah. I don’t want to name the institution because I don’t have approval, but this is an institution in the Midwest where the board saw a deterioration in financial performance and basically put the CEO on notice: “Either you get these losses down, or we’ll get a new CEO.” It was that clear.
He got the message, and he put together a group of physician leaders to look at it. I had the privilege of being asked to be a consultant to help them. We put in a new compensation system, changed the way decisions are made, and really made it a more physician-centric environment. Key to making that change was that if the financial performance exceeded the board’s stated goal, half of that went to the physicians, and they got to decide how to allocate that. Ultimately, they divided it by RVUs. So the system did better financially, and the physicians did better as well.
This relatively small health system in the Midwest, because of its strength, was able to grow. A larger system in a bigger city about 50 miles away got into trouble—a very well-known system that was twice the size—and that board had changed CEOs more than once. The larger system still didn’t do well, and there was a lot of animosity. Their board said, “We need to merge with a physician-centric system.” So they took this smaller Midwestern system and merged, and now the system is three times the size in less than a decade—strong financial performance, improved clinical outcomes—and it’s not only helped that short-term problem, but it’s really the right way to grow strategically and to grow in a sustainable way.
So I think it’s part of the magic sauce. Successful systems need to be aware that if we can improve how we employ, manage, and empower physicians, that’s a cultural uniqueness that few organizations are able to create. But if you can pull that off, you will be stronger going forward.
Kevin Pho: We’re talking to Jeffry A. Peters. He’s a health care executive, and today’s KevinMD article is “Ending physicians’ addiction to unhappiness.” Jeffry, let’s end with some take-home messages that you want to leave with the KevinMD audience.
Jeffry A. Peters: Yeah, I think the take-home message is that, for any health system, your most important asset is your physician. What you need to think about every day is how you can nurture and improve your physician relationship so that every physician leaves the building in the evening saying, “I feel valued, I feel appreciated, and I’m given the resources to take the best care I can of my patients.”
Kevin Pho: Jeffry, thank you so much for sharing your perspective and insight, and thanks again for coming on the show.
Jeffry A. Peters: Thank you. I really appreciated it and enjoyed it. You have a great day, Kevin.