Ken Carow

Professor of Finance

Kelley Venture Fellow

When physicians gain a greater understanding of financial management, they are able to both understand and influence the financial direction of their organizations. This is the goal behind finance courses taught by Ken Carow in the Physician MBA Program at the Kelley School of Business.

“An MBA allows physicians to understand why various decisions are being made at their companies,” he said. “It allows you to understand your company and also allows you to understand how to speak in the language of those in healthcare administration. If you can’t speak that language, you’re less likely to accomplish your goals. This degree helps you add value to your organization.”

Carow holds a chartered financial analysis (CFA) designation and a PhD, bringing both academic and professional experience to the classroom. His research primarily focuses on financial institutions and capital structure, and he serves on the board of Fortune 500 company Thrivent Financial.

“I have the opportunity to see how financial decisions play out in large companies with unique structures, such as non-for-profits,” he said. “This certainly highlights the differences between for-profit and non-for-profit companies. In the medical field there are many hospitals that fall within both categories, so understanding those differentials is important to anyone in healthcare management.”

Understanding how the capital structure and organizational structure interrelate with each other helps physician leaders understand the capital decisions being made at their companies and prepare them to influence those top-level decisions.

In the financial management course, Carow instructs physicians on how to provide insight into the time value of money and then moves into how to make decisions about new projects that an organization may take on, and how to evaluate those projects.

“Most physicians will be confronted with the decision to purchase something to either replace or expand their facilities’ offerings. With technology changing as rapidly as it is today, there’s always a decision to make regarding how long you should keep a new piece of equipment, when to replace it and understanding the economies of scale that affect the organization,” he said. “All these factors play into decisions that physician leaders will make. If they don’t know how to communicate these concepts from a financial perspective, it’s less likely that their project will be embraced by the organization and administration. Physicians will also learn how to identify projects that don’t add value to the organization and should be avoided.”

Carow’s financial management course also explores the strategy of the healthcare organization and how that approach affects the financials. This helps inform leaders on the financial health of the company as they make ongoing decisions about borrowing capital, using equity and how to make decisions such as expansions.

“Understanding how the capital structure and organizational structure interrelate with each other helps physician leaders understand the capital decisions being made at their companies and prepare them to influence those top-level decisions,” he said.

Understandably, finance may not be an area in which physician MBA students have had a great deal of experience. Carow acknowledges that these may be new concepts, and he approaches these lessons by having students work through a problem, discuss as a group and answer any questions that arise. Having taught MBAs for over twenty-five years, Carow says it is enjoyable to teach physicians.

“These physicians bring to the classroom a wealth of knowledge regarding the healthcare industry and their roles as physicians. Many are very involved in the managerial decisions being made at their organizations,” he said. “Because of this, we enjoy very robust conversations about the industry and about the role of finance in their careers. They often use these lessons for direct and immediate application in their organizations.”