It’s More Important Than Ever for Physician Leaders to Develop Financial Literacy—Here’s How to Start

Healthcare and finance
Healthcare and finance

Financial literacy will always be an important skill for a physician leader. But now, because of the ongoing challenges of COVID-19 and the unique demands it imposes on budgets, the skill set is even more critical. Understanding how resources are allocated and how to negotiate and self-advocate during financial discussions has never been more important.

“We’re not trying to teach you to be a CFO but to speak to one,” says Ted Witherell, faculty member in the Department of Health Policy and Management, program director for Health Care Financial Management for Physician Leaders at the Harvard T.H. Chan School of Public Health, and former Senior Director of Talent Management for the Mass General Brigham health care system.

Physician leaders often learn the language of budgeting piecemeal instead of in a formal setting—and the challenge is to get from some to enough workable knowledge. Leaders need to bridge this gap effectively; understanding the language of business and finance will mean successfully influencing those who manage the budget in an organization. But how do they accomplish this?

Physician Leaders Within a Stressed Health Care System

Witherell says that the literacy work with physician leaders usually begins around accounting and budgeting. But in a more macroscopic way, he also focuses on the unique financial stressors physician leaders face in the health care system, including:

  • The stresses of budgetary restrictions and internal competition for scarce dollars
  • The further stress of needing to devote funds to a COVID-19 response (or not receiving as much money because of COVID-19 costs)
  • Health insurance and the challenge of optimizing patient care in an environment that uses both fee-for-service and value-based care

Some of this work begins simply by physicians acknowledging they were never formally taught about finances and engaging in tough conversations to understand it more completely. That can be challenging, especially since physician leaders may be used to a more top-down flow of information. But understanding budgetary needs not just within their environment but also larger operational needs helps them understand the big picture of health care costs, which impacts patient care at every level, says Witherell.

A Health Care Structure That Causes Financial Conflict

In addition, health care systems can be deliberately organized in a dyad, with an administrator on one side and a physician leader on the other. “There’s a structure that creates tension between them—on purpose. If physicians had their way they’d be off practicing medicine without worrying about the money. That’s why they got into medicine in the first place. That’s why we have financial experts,” says Witherell.

Both sides can get easily frustrated with the other. The physician leader may feel as if they’re being stymied or resources are being withheld, and the administrative leader may feel as if their expertise is undervalued or their valid concerns about fiscal responsibility are being challenged. In both cases, perspective is distorted by the training that enabled them to obtain their position and the biases that come with it.

But the two opposing points of view don’t have to permanently be at odds. As a first step, Witherell encourages empathy—reminding physicians that administrators choose to work in health care because they believe in the mission, too.

“Conflict comes from things we care about, and we both care about patients, so that’s a nice place to start.”

The key is for physician leaders to learn to speak the language of business and finance well enough to understand and influence financial experts. Witherell summarizes how physician leaders should approach this: “The best way to get my way is to say it in a way they understand.”

Working to Obtain Financial Literacy for Physician Leaders

Thus, physician leaders must engage in what Witherell calls “organized common sense” to fill their knowledge gaps, immersing themselves in the work to learn the concepts in a methodized, orderly fashion so that the information is comprehensive, relevant, and applicable to a real-life setting. A few factors are important as physician leaders begin this slow process:

  • Providing a sense of validation is key: where does your particular knowledge base lie on the spectrum of knowledge? It’s usually more than people think. “Financial literacy is a blindspot for physicians. They’re a little frightened of this space, so validating that they already know enough to build off of is helpful,” says Witherell.
  • Paying attention to financial conversations, particularly as it relates to the “dyadic” relationship with a financial administrator: what are you understanding and not understanding in these discussions? How can you close the gap? This can be intimidating and uncomfortable, and Witherell refers to it as moving from unconscious incompetence to conscious incompetence—before moving, ultimately, to competence.
  • Looking at common themes that arise during this work: what are the things you care most about and what challenges exist for your organization? “A lot of physicians would love to understand how money moves. Understanding this is very empowering for leaders,” says Witherell.
  • Learning how to ask questions: what can you ask at a high level in discussion with financial experts to help you expand your knowledge, stimulate discussion, remove antagonism, and ultimately get what you need?

This can feel a little like starting over with a new skill set and often requires an intense amount of vulnerability. But when physicians walk away with strategic financial planning skills, it can make a world of difference. As Witherell explains, physician leaders can go back to their own departments and sectors knowing: “Here’s how I think about the money I need to structure spending in order to achieve my strategic goals.”