COMMENTARY

No, Physicians Aren't Lousy Businesspeople

Arlen Meyers, MD, MBA

Disclosures

December 05, 2014

Do Doctors Make Poor Businesspeople?

How many times have we heard it? Doctors are less than ideal as businesspeople. If you believe the stereotype, physicians are short on business savvy when it comes to running a practice, investing, saving for retirement, and spending their hard-earned dollars wisely.

But it simply isn't true, contends a physician who works frequently with doctors who successfully start new business ventures. Otolaryngologist Arlen Meyers, MD, MBA, a professor at the University of Colorado School of Medicine in Aurora, Colorado, and president of the Society of Physician Entrepreneurs, makes the opposite case: that many physicians have entrepreneurial talent.

Here he makes his case.

Six Types of Physician Entrepreneurs

Biomedical and health entrepreneurship is the pursuit of opportunity using scarce resources with the goal of creating user-defined value through the deployment of innovative biomedical products, services, processes, or platforms. In fact, while most physicians do not consider themselves entrepreneurial, most are creating substantial value at a profit by optimizing practice management techniques and incorporating best practices.

Using that definition, there are six types of physician entrepreneurs.

Traditional small business entrepreneurs. Private practice in the United States is shrinking, but still, the majority of practices, particularly those in primary care and in rural and underserved areas, are small to medium-size practices that are physician-owned. Yes, changes in the healthcare system are putting pressure on profitability, and there are high-profile cases of doctors going bankrupt. But the vast majority of practitioners are practicing at a profit and earning six-figure salaries. Some make substantially more and own multimillion-dollar, multioffice enterprises employing hundreds of people. Some earn less.

Although there are disparities between generalists and specialists, most are generating value at a profit and adapting to thrive. Private practitioners generally run "lifestyle" businesses that create a level of profit deemed suitable to the owners, with little regard for creating equity or harvesting at an exit. Still, day in and day out, they are the shock troops of the healthcare system, adding value for patients every day.

Technopreneurs. These are physician entrepreneurs interested in getting products and services to customers by creating and scaling a business. By so doing, they create value for patients, founders, shareholders, and others.

There is a difference between biomedical and health innovation.

Biomedical innovation usually refers to those products and services—like drugs, devices, vaccines, biologics, and in vitro diagnostics—that take a long time to develop; have significant regulatory, intellectual property, and human subject requirements for clearance; and require substantial amounts of capital to get to market.

Health innovation, on the other hand, refers to innovation using digital health technologies—for example, the application of information and communications technologies to improve health; care delivery innovation; business process innovation; or platform or systems innovation to improve outcomes, reduce per capita cost, and improve the patient experience. Examples include telemedicine, retail-based clinics, smartphone apps, patient portals, and medical social media sites.

Digital health innovation has exploded, and investors have noticed, putting about $3 billion to work in healthcare information technology in the past 9 months.

Intrapreneurs. The number of employed physicians continues to rise. Intrapreneurs are employees of an organization trying to act like entrepreneurs from within. Like other entrepreneurs, they face substantial barriers to creating, developing, and harvesting innovation, because not only do they have to find the right product-market mix like other entrepreneurs, but they also have to do battle with the status quo and organizational resistance to innovation.

Social physician entrepreneurs. Their primary interest is to improve the human condition. However, no nongovernmental organization (NGO) or nonprofit can survive for long without using best business practices to run operations at a profit. Whether it be creating vaccine for a deadly but relatively rare disease; creating platforms to deliver care in underserved and underresourced areas; or building models to deliver high-quality, high-volume care at an affordable price, physician social entrepreneurs are creating substantial value for patients around the world.

Freelancers and consultants. Many physicians have left practice to become consultants to other physician entrepreneurs, specializing in marketing, healthcare social media, digital health, financial planning, or business development. They have become part of the freelance economy, building portfolio careers to serve their clients while bringing a unique medical perspective and understanding of the healthcare ecosystem and the opportunities it presents.

Physician investors. Every startup team needs to fill a handful of skill positions, including problem seekers, problem solvers, business builders, storytellers, and money finders. Several physician-only angel networks, like www.angelmd.com, have surfaced to fill the gap, and physicians are coveted as early investors in domain-specific seed-stage companies. Physicians are creating and building biomedical and health crowdfunding sites and are taking active, hands-on roles in managing the company.

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