The typical MBA employment report from a business school shows that most MBAs have little interest in the healthcare field. At Harvard Business School, for example, only 7% of last year’s MBA graduates ventured into the health care sector, with nearly half of them going into biotech or pharma. It was a similar story at Wharton where less than 6% of the graduating MBAs last year took jobs in health care.
Instead, MBAs largely flock to consulting, finance, and tech companies. That is going to change dramatically over the next five to ten years. With healthcare now accounting for 18% of the American economy, roughly $3.3 trillion in all, the industry is beginning to seek more professional managers and leaders. Healthcare startups, eager to disrupt a largely inefficient delivery system, have become more common. And finally, healthcare is a field where MBAs can play roles that genuinely provide social good.
So we turned to a business school that is already leader in the field, Vanderbilt University’s Owen Graduate School of Management where 16% to 20% of the school’s MBAs typically head into the healthcare field. That’s twice the percentage of Harvard and three times that of Wharton. Owen, in fact, funnels more than five times the percentage of MBAs into healthcare as Columbia, Chicago Booth, or NYU Stern.
WHY VANDERBILT’S OWEN SCHOOL IS SO STRONG IN HEALTHCARE
How come? The school’s location in Nashville, Tenn., plays a big role in Owen’s outcomes. More than half of the private hospital beds in America are managed out of Nashville which boasts hundreds of companies in the city’s metro area involved in the healthcare industry. Many of the school’s alumni hold leadership roles in the industry, from startups and early stage companies to the big managed care concerns. And Owen has on its faculty some of the foremost academic business experts in the field.
Like several other business schools, Owen offers MBA students a concentration in healthcare with more than a dozen electives that range from Healthcare Law & Regulation to Healthcare Analytics. A healthcare immersion allows students to gain the perspectives of physicians, nurses, patients, scientists and administrators in real healthcare settings. MBA students even watch actual surgeries being performed and visit Vanderbilt’s LifeFlight critical care helicopter service, the Mass Spectrometry Research Center and community clinics. But what sets Owen apart is its deep connections to Nashville’s healthcare ecosystem.
That’s why we interviewed Owen Dean Eric Johnson about MBA prospects in healthcare and how he sees the future unfolding. Here’s an edited transcript of our interview in Houston at the CentreCourt MBA Festival.
John A. Byrne: So one of the most intriguing things to me about where you are in Nashville, is the fact that it’s really the epicenter of the healthcare industry. And I’m wondering how that plays out in what you teach and what your students ultimately do in the jobs that they take.
Eric Johnson: Well we certainly have a lot of students who are interested in health care, and as you point out, Nashville. People don’t think about it as a healthcare center, but there are over 400 health care companies in Nashville, 18 publicly traded ones. Over half the privately managed beds in the U.S. are managed out of Nashville. So, that’s a lot of opportunity and something that’s changed a lot over the last couple of decades.
Byrne: Historically, MBAs have not been attracted in a mass way to the healthcare industry. I think when you look at the employment stats at most schools, it’s probably five percent or four percent. Your school is well above the average, something of an outlier.
Johnson: We approach about 20% of every MBA class goes into healthcare.
Byrne: It makes total sense, given the stats that you just reeled off. But I wondered, given the size of this industry, and its importance to the American economy, whether you think we’re going to see far more MBAs take opportunities in this field in the future?
Johnson: Yeah, when you follow the money, right? Americans spend $3.5 trillion in health care a year, nearly 20% of the U.S. GDP and growing at 5% or greater every year, much faster than GDP growth. So, there’s a lot of money there. But, not just a lot of money, but health care is becoming more professionalized. So, if you reel back 20 years ago, there weren’t very many MBAs managing hospitals, managing health care companies or those in insurance. All these things were in many ways, kind of driven by the health care profession itself. And today, that really changes. You see the management structures of these companies looking much more like financial organizations than a health care organizations, where the CEO may no longer have an MD. The CFO clearly doesn’t, and in their place, there are more and more opportunities for MBAs to find really interesting jobs in the healthcare sector.
Byrne: And also in health care start ups because a lot of disruptive biotech and other healthcare delivery companies are getting started by young people.
Johnson: When you start thinking, there’s a huge spectrum here when we talk about health care for MBAs. Certainly a big hunk of our students go into consulting, but it’s healthcare consulting. They’re consulting into healthcare companies, but they’re the familiar sets of names that we would see anywhere. Yet we would still think of them as health care. Likewise, on the other end of the spectrum, lots and lots of start up activity is happening. The U.S. health care system is in a constant state of churn, and it’s creating a lot of opportunities to roll up all kinds of specialties. For example, anesthesiologists, emergency room doctors, whatever, they get bundled up as a service sold back to hospitals. It’s very much a roll up kind of industry right now, and that’s an MBA sweet spot. MBAs love conquering the world, rolling up industry and a very fragmented industry at that.