Thought leadership

Medical Directorships: Maximizing ROI

Medical Directorships: Maximizing ROI

With guest author, Kathy Buell, Director of Provider Compensation, Providence St. Joseph Health



The journey from fee-for-service to value-based payments is going to require buy-in from everyone on the health care continuum. But who will be the most important stakeholders?

Physicians, according to 81% of participants in the first NEJM Catalyst Leadership Insights Council survey, are the most important stakeholders. Surprisingly, patients, who are supposed to be the epicenter of this evolving marketplace, are named the most important stakeholders by only 58% of Council respondents.




A recent 2016 Gallagher Integrated survey of medical directorships and physician executives unveils several key insights into the scope and nature of these new physician leaders on the health sector leadership stage. As illustrated in Exhibit 1, 75 organizations participated in the Gallagher Integrated 2016 review of medical directorships and physician executive roles across the US. These organizations reported they employ over 58,000 physicians, and rely on 2,459 physician leaders, who were paid $329 million for their generally part time activities. Many health systems now have from 20-200 full and part-time medical directors and physician executives.



Hospitals, Health Systems and Accountable Care Organizations recognize that their journey into value for money contracting and population health can only be navigated by a new generation of physicians serving in a wide array of leadership roles, such as:

  • •    Physician Executive Officers
  • •    Clinical Department Chairpersons
  • •    Board Members
  • •    Chief Medical Officers    
  • •    Medical Directors
  • •    Lead Physicians
  • •    Service Line Managers
  • •    Clinical Site Leaders
  • •    Function Directors
  • •    Medical Staff Officers
  • •    GME Program Directors

Each physician leader can have unique position descriptions of their roles and responsibilities, as well as the formality of how they perform their leadership responsibilities. In this paper, we refer to the diverse collection of physician leaders as “Medical Directors.” 


The roles of medical directors embrace these key champion activities

  1. Champion for excellent and improving design, development and road mapping for care delivery systems across the organization’s ambulatory and inpatient care landscape for enhanced care quality, safety, and cost effectiveness
  2. Champion the needs of patients for best care and best experience performance goals and work
  3. Champion the professional & practice needs of specialty provider colleagues
  4. Champion the needs of organized medical staff functions and graduate medical education programming
  5. Champion the needs of employed Medical Groups within the system for professional, personal and organization growth 
  6. Champion to achieve and maintain rigorous provider credentialing and privileging
  7. Champion the development and use of high quality clinical care protocols and electronic medical/health records
  8. Champion for hospital and clinic site and service line economic vitality
  9. Champion value for money in all purchaser/payer agreements
  10. Champion systems, staff, and infrastructure needed for the continuous improvement of physician leadership performance planning and management effectiveness


As the Executive and Board leaders of hospitals and health systems recognize the growing importance of these medical director roles to be essential to successfully make the journey into the land of accountable care, they are asking these Top Ten questions:

  1. How many of these physician leader positions should a health system have?
  2. How many do we have now?
  3. How much are/should we be paying them?
  4. Are we getting a good ROI from these investments?
  5. Do we have internal equity among the many medical directors across specialties?
  6. Do they have clear position descriptions and work reporting tools that align their work to the mission and strategic plans of the organization?
  7. How can we measure, staff, and support their performance as medical directors?
  8. How should we best be conducting performance reviews for these many physician leaders?
  9. How are we recognizing and rewarding the high performing medical directors compared to weak performers?
  10. How are we ensuring that the work and compensation of these medical directors do not push us into compliance issues with the OIG of Medicare or of the IRS for our tax-exempt status?


While a full scale, onsite audit is an essential tool for boards and physician executives to answer these questions, we can provide practical insights from our work with scores of clients regarding:

  1. While a full scale, onsite audit is an essential tool for boards and physician executives to answer these questions, we can provide practical insights from our work with scores of clients regarding:
  2. The top five factors that frustrate the success of medical directors, and
    Five key strategies to enhance the work, pride and performance of medical directors




  1. Unclear expectations of the work of the medical director, and how the organization defines success. Physician leaders often complain... “I have always been an overachiever, but how do they expect me to be a high performer in this medical director job if they do not define what I am to accomplish, how to measure my success, and do not offer any support to get my new work done, and still see patients?!” (New York)
  2. Weak onboarding process to orient the medical director to the job, the work setting, and to the stakeholder who will key to success. As many medical directors have had minimal leadership training and support, frustrations to success are not only unclear job responsibilities, but poorly defined roadmaps of who they need to work with, and practical tools to engage, guide, develop and lead teams to accomplish disciplined action plans for clinical and administrative process/system improvements. 
  3. Weak staff support and systems to help enable the effectiveness of the medical director. Health system change and the journey to accountable care and value for money contracting is a team sport. Physician leaders need support on when and how to be a leader and a follower in their service line, department, or site manager roles. Even if linked with a “Dyad Administrative Partner” the dyad partner may also have underdeveloped skills for collaborative problem definition and problem solving.
  4. Time management stress as medical directors retain patient care service roles. It is not uncommon for a talented physician leader to keep a majority of their time to see patients. Unfortunately, they may also wear 2-3 leadership roles in the business teaching, research and managerial aspects of the health system. Burnout is becoming too frequent an experience for personal and organizational performance slips. 
  5. Under-developed performance planning and management, with weak links to incentive compensation. The last time that many medical directors had someone provide performance suggestions and oversight review of their work was their residency training. Even gifted professional athletes need game plans, mentors and coaches to achieve peak performance. Many physician leaders lack not only clear position descriptions, but few people and systems to measure, monitor or recognize their “progress to plan.” Hard charging medical directors are more likely to flourish with a combination of honest performance management support and recognition and financial rewards for their good work.



  1. Clear position descriptions must be aligned with the strategic mission and business plans for the organization: Arrange small group sessions with a mix of managers and physician leaders to map needed competencies and activities for medical directors that are driven by the imperatives captured in the organization’s strategic and financial plans. Medical directors must balance not just quality and care experiences, but the costs and revenues needed for service line, clinic, hospital or departmental success and sustained vitality.
  2. Competency Orientation and Development Programs. Medical Directors want to be successful, for patients, the organization, and for their own sense of personal and career accomplishment. Multi-media learning programs about their role expectations, and the competencies they will need for success can help improve the probability of their success. These programs are needed within 30 days of when they accept their leadership role, and once a year thereafter. Investments are also valuable in these methods:
  • • Mentors (from within the organization’s other physician, nurse and administrative managers) as they experienced from their chief residents
  • • Access to internal Physician Leadership Academies 
  • • Reliance on case studies of frontline challenges in the organization
  • • Subscription to several health and business leadership journals and newsletters
  • • Web based learning from the American College of Healthcare Executives, see:  and the American Association of Physician Leadership, see: 
  1. Performance Planning. Medical Directors need support from their supervisor and dyad partner, before the beginning of each year, to clearly discuss and define performance expectations for the coming quarters. Medical Directors often report on the value of these meetings to establish well-constructed, measurable, actionable annual goals linked to meaningful recognition and incentive pay. 
    Medical Directors can increasingly expect that 10-20% of the annual compensation is related to diverse performance metrics for: quality, patient safety, team work, being an effective champion for citizenship among their unit’s physician colleagues, program growth, and enhanced results in population and community health.
    Performance goals and the work plans to achieve them are now often entered in to web based performance monitoring systems, such as People Soft and Hologen  or Healthcare Source.   These systems can increase the efficiency of performance management, but having one should not be a barrier to starting a performance management program. While perhaps not ideal, traditional paper methods also work as an interim solution.
  2. Performance Management. Beyond the clear goals and fancy software, for enhanced results, high performance health systems rely on inter-personal engagement between the medical director and her or his dyad partner or a respected senior leader in the organization. This interaction must have certain key features for success:
  3. Performance Recognition and Rewards. High performance health systems, clinics, health plans and hospitals recognize the value of creating and nurturing a “Culture of Celebration” in which individuals and teams of frontline providers and managers are recognized and rewarded, in cash and non-cash ways, when metrics are achieved. Health sector organizations are focusing more attention now on incentive compensation programs for Medical Directors.  Compensation is important, but organizational culture that is aligned with organizational strategy is foundational to the success of these initiatives.  Future recognition programs will, however, also be woven into these cultures, and will borrow and adapt ideas from other industries for everything from travel and training, to posters, promotions, and parking. 



To optimize the performance of medical directors, wise boards and executive teams will have frank conversations about the roles and responsibilities of these physician leaders, and then invest in the staff, systems, and training that gives the physician medical director a fair opportunity to succeed.

Contact our team to help you conduct a careful assessment, enhancement plans and incentive compensation to enhance performance, pay, and pride within your medical directors and physician leadership development programming.


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Cathy Kibbe


Cathy Kibbe is a Managing Principal with the Physician Services service line of Integrated Healthcare Strategies, a part of the Gallagher Human Resources & Compensation Consulting practice. Her clients range in size from rural community access hospitals to multi-state health care systems. Areas of focus include compensation audits, the design and administration of new compensation systems, incentive compensation design, physician executive compensation issues and physician opinion surveys.

She has over 25 years of experience ...

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Tony Kouba

Tony Kouba is a Managing Director with the Physician and Advanced Practice Provider Services service line of Gallagher’s Human Resources & Compensation Consulting practice. Mr. Kouba has over ten years of experience in physician compensation, acquisition, and integration. 

Mr. Kouba’s uniquely balanced perspective of drawing conceptual conclusions from detailed analysis has helped many clients realize their strategic vision and accomplish corresponding objectives. Mr. Kouba’s consulting is dedicated to helping clients ensure that their existing compensation programs ...

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James A. Rice

Jim Rice, PhD, FACHE is the Managing Director & Practice Leader with the Governance & Leadership service line of Gallagher’s Human Resources & Compensation Consulting practice. He focuses his consulting work on strategic governance structures and systems for high performing, tax-exempt nonprofit, credit union and health sector organizations and integrated care systems; visioning for large and small not-for-profit organizations; and leadership development for Boards and C-Suite Senior Leaders. 

Dr. Rice holds masters and doctoral degrees in ...

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