The Business of Medicine

This is a two-part post about technology and managerial capabilities as applied to health institutions in China.

A few weeks ago, as I was in the office late on a Friday night, my boss Dr. He and a couple colleagues had begun an informal chat about the state of projects being run out of the Zhongshan Ophthalmic Center. (Don’t wonder too much about why there were so many people in the office at 9pm on a Friday night; we’re either all really hard workers or have no social life). The conversation turned to a few projects which had—shall we say, been progressing in a slightly less organized fashion than one might hope.

“What’s happening?” Dr. He exclaimed exasperatedly. “How can people working in the same office not know what’s happening with the project of the person next to them? How come you never do what I ask you to do?”

One of the doctors tries to smooth it out. “But Laoban (“boss”), we always do everything that you say.”

“Then where are the written reports?” Dr. He shoots back.

Technology and managerial capabilities are two key components of the success of any organization. This kind of language is traditionally applied to business and manufacturing, where globalization and foreign direct investment (FDI) has spurred sweeping changes in Chinese firms, from automobiles to the production of cheap knock-offs (which multinational corporations have grown to hate and we consumers have grown to love). But viewed in a different perspective, healthcare is itself an industry facing shifts in traditional modes of management and use of technology, which has significant effects on healthcare delivery and outcomes.


In one working paper titled, “Knowledge Capital, Endogenous Growth and Regional Disparities in Productivity: Multi-level Evidences from China”, Fu et al. lists four ways in which knowledge capital is gained: internal generation, inter-generational transfer, international transfer, and endogenous accumulation (the last of which can lead to “perpetuating cycles of success and failure”). In the context of health services provision, this roughly translates into internal clinical and systemic research, training and education of health personnel, adoption of international experiences and best practices, and institutional development and growth, respectively. In other words, this means that if a health institution fails to conduct and apply continuous research, or lacks an effective training and continuing education program for health providers, it can be susceptible to the same innovation slumps that firms are, leading to the same regional disparities in healthcare provision and outcomes.

The paper then highlights the disparities in FDI and innovation between coastal and inland areas of China. This same trend is reflected in the vast geographic disparities in health resources and health outcomes. I’m willing to bet that the two aren’t completely unrelated.

Dr. Frank Lexa, a professor at the University of Pennsylvania whom I met with briefly at the beginning of last summer, has published a number of papers advocating for doctors to better understand business principles and for business to better understand the practice of medicine. The number of medical schools in the US offering join MD/MBA programs is on the rise, growing from 6 in 1993 to 50 in 2009. But for many doctors, even the idea of pursuing an MBA degree often elicits mutters of “going over to the dark side” from their colleagues, and for a country that has only emerged out of a socialist society in the last 30 years, the development of widespread management practices in China can still be said to be in its infancy.

Shortly following our Friday night gathering, I receive an office-wide text message from one of the administrative personnel. “Beginning this week, we will have weekly Monday meetings to share the progress of the various projects we are working on.” I grin.

Time to accumulate some knowledge capital.

One thought on “The Business of Medicine

  1. Pingback: Physicians, Time to Get that MBA? | In Sight

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