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Nonprofits and Healthcare Are Hiring MBAs

Nonprofits and Healthcare Are Hiring MBAs

An MBA is an admission ticket to careers in finance and consulting. It's tough to enter the inner circle without one. But now the degree is opening less-traditional doors, too.

Case in point is Tim Walter, CEO of the Bethesda, Maryland-based nonprofit Association of Small Foundations (ASF), which provides investment and grant-making advice to small, philanthropic foundations with few or no employees. Walter was brought on board as ASF's COO and then quickly moved up to the top spot, in part because of his MBA training. "The financial side was easy for me to handle," he says. "I could do budgets, crunch a spreadsheet.

Parallels Between For-Profit and Nonprofit

Earlier, ASF lacked that financial know-how, says Walter. And even though making money isn't the measure of a nonprofit's success, running such organizations is "still about customer service and revenue," he says. ASF does some grant seeking but relies on dues and sponsorships for 75 percent of its revenue.

"We are structured like a small business and measure ourselves the same way we would if we were for-profit," Walter says. ASF surveys its members annually to make sure they are satisfied with the training programs and publications it offers, and it also looks at renewal rates. "We hold ourselves accountable," he says.

It's easy to assume nonprofits have nothing in common with big business, but there are parallels. Walter's MBA training prepared him for another key role as a nonprofit CEO: Securing funds from larger foundations.

"The foundations that provided us money are the equivalent of seed-capital venture investors," says Walter. "And we are the proven entity looking for new rounds of investment funding -- except that we don't have to pay it back." Walter expected to do battle to get the money, which helps ensure the small family foundations ASF serves are well-run. "But I would have a different view of this job if I had been to a school of public administration," he says.

MBAs can bring some much-needed "results culture" to nonprofits, says Walter. But, fearing the high salaries MBAs can command, nonprofits tend not to recruit them. "It's the same reason small businesses don't hunt for MBAs," he says.

Making Sense of Healthcare

"What's happening in industries such as healthcare is so unbelievably complicated, you need an MBA just to make sense of it," says Michael Kraten, founder of management consultancy Enterprise Management in Milford, Connecticut. Kraten, who teaches in part-time MBA programs at the University of Massachusetts Lowell and Suffolk University in Boston, says, "We see some MDs and PhDs getting their MBAs, but typically they aren't practicing mainstream medicine.

Until recently, hospitals and other healthcare organizations usually didn't recruit MBAs. But with the industry in flux, healthcare players are increasingly tapping the MBA mind-set, says Susan Odegaard Turner, founder of Turner Healthcare Associates consultancy in Thousand Oaks, California.

Big-Picture Thinkers Needed

"You need big-picture thinkers who can factor in all possible outcomes," she says. For example, it seemed like a good idea for a hospital to eliminate nurse's aides to cut costs. But the hospital paid the price when workers' compensation claims soared. Turner explains that senior nurses, many in their late 40s, injured their backs lifting patients previously cared for by younger aides, who were less prone to injury. "It takes an MBA to identify those kinds of issues," she says.

"It used to be the longer a patient was in the hospital, the more money the hospital made," says Turner. But managed care reversed that. "Now hospitals make money with shorter patient stays and fewer procedures -- by giving the least amount of care that is appropriate.

The new rules have led hospitals to hire MBAs in increasing numbers, often to implement formal programs for quality improvement. "If patients are stuck in the ER, it affects the entire system," says Turner. "You get a domino effect throughout the hospital. It impacts getting procedures ordered, getting diagnostic things done, getting patients discharged.

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