Corporate Practice Management in the 21st Century: Why Democratic Governance No Longer Works

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As a manifestation of their core DNA, physicians dislike being led. As a corollary, physicians dislike, to a greater or lesser extent, their leader, particularly those leaders actually empowered to lead. To circumvent the leader problem, physicians tend to select a democratic form of governance for their practice, thus diluting the position of the leader.

The process of consensus building is the functional crux of the democratic governance model. It permits the partners to maintain an appearance of equality while, at the same time, allowing decisions to be made with only minimal direction by the leader.

Developing a consensus opinion is essentially a mathematical exercise: Members alter the proposal until the math works. The achievement of majority support for the proposal necessarily becomes the primary goal of the argument when, in reality, the primary goal should be the development of an opinion that improves the competitive stance of the group in its marketplace.

The very nature of the math of consensus development ensures that the content of the proposal is diluted until it is acceptable to a majority of voters. While proponents are looking for enough residual content to make the desired change, opponents seek enough dilution to limit any undesirable effect. The proposition is watered down to a level that is acceptable to the majority of voters, and in the end, the corporate value of the proposal is lost.

Consider this hypothetical partnership meeting. Physician A (CEO and senior partner) says, “The clinicians in our office building want us to open our office on Saturday, from 9 am to 2 pm. Most of the physicians’ offices are open until 1 pm, but they are usually running late, so they want us there until 2 pm.”

Physician B replies, “It will cost us a fortune: $400 in technologists’ salaries, plus additional nontechnologist expenses. We will lose all kinds of money. Besides, many of these physicians send their patients to our competitor down the street during the week. I vote no.”

Physician C (who has a Saturday-morning golf game in the summer and who skis on Saturdays in the winter) adds, “I vote no, too.” Physician D (who is busy on Saturday mornings with family and church activities) says, “I vote no.”

Physician A says, “Rather than turning the physicians down completely, let’s work out something. We need a compromise.” After much haggling and complaining, a compromise is reached in which the group will provide limited services (radiography and mammography) from 10 am to noon. The vote is carried with five in favor and four opposed.

Physician A informs the clinicians of the group’s decision. The physicians are furious; making mammography and radiography available until noon is insufficient. In the end, the extended hours fail. After six weekends of losing money every weekend and squandering the radiologists’ weekend time, they are stopped. How could a consensus decision—the product of such an elegant, human political process—produce such a bad outcome?

Mathematics to Nowhere

Consensus building is simply a cold, objective mathematical process. Of itself, it has no capacity to ensure the propriety or validity of any decision. Even worse, our infatuation with the perceived wisdom conferred by consensus building allows us to select inappropriate conclusions, as we smugly envelop those conclusions with the crowd’s aggregated wisdom.

If the math is not damaging enough, two intrinsic weaknesses of the radiology partners are what ultimately sink the whole Saturday-hours endeavor. First, incomplete knowledge of the background issues is a devastating malady. The CEO is uncertain of the politics. Many of the other partners might have no understanding of the political implications of withholding needed clinical services from the referring physicians. If the knowledge is incomplete, it is very easy to get off track during the discussion phase, diluting the analysis with unsubstantiated opinion.

Second, the partners’ personal biases will readily fill any void created by incomplete knowledge. The discussion becomes all about the other issues: the Saturday golf outing, social and family issues, or any other competing pet project. The importance of Saturday office hours is lost, and the analysis is doomed.

It is readily apparent that consensus building is not a strong, useful management process in the competitive business marketplace. The math (and the inherent personal biases of the group) will inevitably