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February 6, 2007

A New Way of Educating Our Future Healthcare Leaders

Cliff Cramer, who directs the School’s new Program in Healthcare and Pharmaceutical Management, explains how a multidisciplinary business education can help mend an increasingly convoluted and flawed industry.


Cliff Cramer, who directs the School’s new Program in Healthcare and Pharmaceutical Management, explains how a multidisciplinary business education can help mend an increasingly convoluted and flawed industry.

The healthcare industry, now the largest sector of the U.S. economy, has long provided enormous opportunities for ambitious and talented business professionals. And for many years, the route to success was rather simple: an MBA student with an interest in healthcare might manage the finances for a hospital, become a star marketer for the latest pharmaceutical offering, work on the deal side of a healthcare merger or provide consulting services.

Those opportunities still exist. But healthcare jobs for MBAs have changed because of the complexity of the industry today. The industry is comprised of an array of interconnected parties that provide care (physicians, hospitals and other institutional providers), pay for care (government, insurers, employers and consumers) and receive care (patients). In such an environment, there’s far less of a need for managers who want to operate only in functional silos like R&D, finance or law.

The healthcare industry needs business professionals with sophisticated, multidisciplinary skills. For example, it needs pharmaceutical and medical technology executives who can maneuver through an often-hostile regulatory and political environment, while ensuring that customers can afford their products. It needs hospital managers who can create operational efficiencies, while improving care and advancing a community mission. And it needs corporate benefit managers who can structure creative benefit plans that curb costs, while rewarding innovation and wellness initiatives.

Healthcare’s complexity is in part the result of the industry’s advances and growth. Pharmaceutical companies and manufacturers of healthcare devices have poured funds into creating technology-based tools that prevent and treat disease, illness and physical abnormalities. Innovations have been hugely successful in both extending life and improving the quality of life.

However, this new technology — together with an aging population and system inefficiencies — is costly: from 1970 to 2005, U.S. healthcare spending as a percentage of GDP jumped from 7 percent to 16 percent. These soaring costs threaten our ability to continue to invest in, and afford, much-desired innovation.

The challenges confronting healthcare extend beyond such escalating costs, as the industry continues to be plagued by a system that remains fragmented and inefficient, with misaligned incentives and uneven quality of patient care. The key challenges facing leaders and managers of healthcare enterprises are to continue to drive innovation — developing breakthrough drugs and new medical and information technologies — while addressing the growing problems of affordability, inefficiency and gaps in quality.

To be effective in meeting these challenges, healthcare leaders and managers need knowledge of and training in areas like organizational effectiveness, leadership, product and technology development, capital formation, finance, supply chain management, risk assessment, intellectual property, mergers and acquisitions, entrepreneurship and public policy. That may sound like a lot. But because the industry has become so complex, each decision by a healthcare manager (or a healthcare investor) involves virtually all of these disciplines.

Recognizing this, last year Columbia Business School established the Program in Healthcare and Pharmaceutical Management. The program builds on the School’s core business curriculum to provide the knowledge and practical training to develop effective leaders and managers of and investors in existing and new healthcare enterprises. Students take pragmatic, insightful courses not just in healthcare management but in strategy and competition, marketing, entrepreneurial finance and economics. Most important, these students learn a new way of thinking: visualizing the effect of each decision on the multiple constituents that provide, pay for and receive healthcare products and services.

With so many practitioners and other experts acknowledging that much of the current healthcare system is broken, there is a greater openness than ever to embrace business professionals with the training and skills to repair it. The healthcare industry has changed, and so does the way we have to educate future healthcare leaders.

Cliff Cramer is director of the Program in Healthcare and Pharmaceutical Management and adjunct professor of management at Columbia Business School. He worked for more than 25 years in the healthcare, pharmaceutical and financial services sectors.

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