Leading Large in Michigan
As practices merge to gain leverage and broad subspecialty expertise, they also encounter commensurate new leadership challenges in governing ever-larger groups of independent-minded members. Consider, then, the challenges inherent in leading one of the nation’s largest radiology private practices, Advanced Radiology Services (ARS), in Grand Rapids, Michigan. It now stands at 114 physicians, 19 physician extenders, and 93 employees in the management company, and is poised for further growth in the short term. Konstantin Loewig, MD, and Marilyn Savidge, JD, MBA, share the Brobdingnagian task of leading ARS. On the business side, Savidge is CEO of STARS, the practice’s management LLC, and has been with ARS since 1995, when it had 14 radiologists and 14 staff members (and covered one hospital). Loewig, on the clinical side, arrived much later, in 2005, when ARS merged with his former group. He was elected president shortly after his arrival. Loewig has practiced radiology in western Michigan since 1978. The colossal group had its start in 1996, with a merger between two large practices in Grand Rapids. After a subsequent merger in 2003 with a practice in Kalamazoo, 60 miles south, and the 2005 merger with Loewig’s group, ARS stood at 80 physicians. In 2006, the group made several paradigm changes in governance that have served it well, through to the present. Because the group was geographically dispersed, and most physicians continued to practice out of their local hospitals, it became clear to Loewig and Savidge that changes needed to be made in governance to ensure that each new division of the group, no matter its size, felt properly represented, and that there were no failure points in communications. They looked no further than this nation’s founding fathers for inspiration.
Marilyn Savidge, JD, MBA, and Konstantin Loewig, MD.
“It is not unlike a state joining the union, whereby states join the union one by one; they retain their independent status, to some degree, as states, but at the same time, become part of the larger union,” Loewig says, in explaining the relationship among divisions. “ARS has become the size that it has by merging with smaller groups that approached it about joining, rather than by predatory actions.” As president of the smallest division, Loewig had a personal perspective on the issue of equal representation. “I wanted to get away from any perception that the larger divisions would be making the decisions for the entire organization, and that the smaller divisions would be led without having much say,” he notes. To that end, ARS initiated two new governance structures based on the two houses of Congress. The governance committee, like the Senate, reserves two seats for the president and vice president of each division, regardless of its size. All recommendations that deal with governance go through the governance committee before being voted on by the board. An additional seat on the governance committee is reserved for Savidge. Representation on the board, as in the House of Representatives, is based proportionately on the size of the division: The largest division has the most representation, and the smallest division has the least. The board ultimately makes the final decision, but the governance committee, along with other similarly represented corporate committees, reviews the detailed information and makes recommendations to the corporate board. “We have a fairly sophisticated structure, with nine different corporate committees,” Loewig states. “Each of the committees has representation from each division, so that when the committees do their research and make their recommendations to the board, those decisions and recommendations will be coming, we hope, from people who represent all of the divisions. Theoretically, all of the divisions have equal input into all of the recommendations made to the corporate board.” A third vehicle was founded to ensure thorough communications between the management company and the physician side of the practice: The STARS board includes the officers of the management company, with physicians represented by all members of the ARS governance committee. “STARS is an LLC that is wholly owned by the shareholders of ARS,” Loewig notes. “As such, it operates as a separate company, with Savidge as the CEO. The STARS board meets once a month to allow a format for the managers in STARS to report to ARS leadership. That’s to heighten and maximize the communications between the two organizations.” To stay aligned, Loewig and Savidge meet weekly and email often. “Our personalities, fortunately, mesh very well, so that we tend to agree on most things,” Loewig notes. “The fact that we both are members of the same structures that we helped form is very useful because we know why this particular vehicle is in place, and we know how to use it.” Though the new governance vehicles have minimized problems attributable to the practice’s rapid growth, challenges associated with size continue to be vexing. For Savidge, the greatest trial is achieving cohesion around a single idea among 114 physicians. “Physicians, by nature, are very independent thinkers,” she notes. “The physicians are very bright people, and they have excellent ideas, but it’s 114 different ideas, and it is sometimes challenging to come up with a direction that the majority want to go in, and then convince the others to go in that direction. I would say that my biggest challenge is trying to make 114 people feel good about any one decision.” For Loewig, the crucible is communications. “I want to emphasize that where we have had some problems, they can usually be traced to someone dropping the ball with communication. Sometimes, questions are raised by an individual shareholder, or a particular division, because for various reasons, that issue was not discussed at that level,” he says. The benefits of the organization’s size, however, are significant. ARS, for instance, is able to afford excellent management: All three top STARS officers possess doctorates in jurisprudence. “One of the benefits of having 114 radiologists working together is that they have the financial resources to provide the kind of technology and staffing that you need to run a large organization,” Savidge notes. Another benefit is the ability to subspecialize and extend those benefits to small, rural hospitals through advanced IT applications. “When you have these rural hospitals that have one or two radiologists, or even five or six, they are, for the most part, general radiologists. When they get a new piece of equipment (for example, a 64-slice CT scanner) and the community wants to start doing some of the studies done in the larger hospitals, the radiologists don’t always have the expertise. When you have 20 hospitals and 114 radiologists, however, you can start sharing expertise and moving the images around, so you can have highly subspecialized expertise. I think that’s probably the biggest benefit we get from our size,” Savidge says. Loewig agrees. “It also gives us a certain amount of confidence to know that we are not out there alone, that we have backup (even if it is electronic and remote) on a difficult case,” he says. “We can get an immediate second opinion on a case without going outside our own organization.” The Right Stuff Much has been written on the qualities needed to be an effective leader. From Loewig’s particular vantage point at the helm of a large physician practice, the most important quality is to have an open mind, in addition to being able to see other people’s points of view. “In our particular organization, with the number and the size of the hospitals and the different geographic locations, there are going to be a lot of different issues that come up locally,” he explains. “I may not necessarily understand what a clinician or administrator in Kalamazoo may want because I never go there. Therefore, I need to speak to the president of that particular division to find out what the situation may or may not be and how it may affect our organization corporately.” Loewig continues, “I have to try to keep an open mind, even though I am not a part of that particular issue, and see it for what it is. It’s true that there are many physicians who never leave the large hospitals because they are subspecialists; they do what they do, and they are very good at it. We also have a lot of interventional radiologists who work at multiple locations and bring services to our smaller hospitals that would not be available to patients in that community if ARS were not as large as it is. Because we are so large, divided geographically, and subspecialized, the corporate president has to try to put himself in the position of the different radiologists (and also in the position of Savidge, from the management part of it) to try to be objective and keep it all together.” When asked what quality is most important in leading the management component of a large physician organization, Savidge does not hesitate: “Integrity, always; the message being delivered may not always be what the physicians want to hear, but if they can trust the veracity of management, they can make informed decisions.” On the Horizon Meanwhile, both leaders are keeping a close watch on political and market developments likely to have an impact on the practice. “We are definitely concerned about health care costs,” Savidge says. “I think everyone is concerned about that. Costs are escalating too rapidly, and something needs to be done.” Savidge believes that all major stakeholders in health care—insurance companies, hospitals, and providers—will need to bring value to the equation or risk their very existence. “The insurance industry, which adds a lot of cost to the equation, is a big stakeholder out there that that needs to be evaluated on the value that it brings,” Savidge suggests. Loewig expresses concern about the teleradiology business model and its potential impact on practices and hospitals. “Right now, there are a lot of entrepreneurial organizations that will approach administrators of hospitals and offer to read their films remotely,” Loewig begins. “I can understand the logic behind that because, in some cases, the teleradiology organizations have very qualified subspecialized radiologists who may be able to provide the interpretations, but the hospitals need to consider the value-added services that on-site radiologists provide.” Loewig continues, “Losing on-site radiology groups that provide on-site consultation, participate in hospital administrative activities, and perform interventional procedures on patients may not ultimately be in the best interest of the hospital. In the case of ARS, size is an asset because we can provide a level of sophistication, subspecialization, and continuity among our hospitals without having to seek assistance from outside groups.” Looking ahead, ARS is on the cusp of yet another major transition. “We are now working on integrating even more than we have already by installing a distributed radiology system with which we hope to be able to read studies from any site served by ARS, thereby further using the advantage of our subspecialization,” Loewig reports.