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OCR for page 171
n The Aging Nature of
Physician Influence in
Medical Sons
Do such major developments as the rise
of investor ownership, the growth of multi-
institutional systems (in which many im-
portant decisions are not made at the local
leveI), and growing competitiveness in health
care affect the ability of physicians (and other
patient care stab) to influence standards of
care in institutions where they admit, treat,
or refer patients? This chapter examines two
means by which such influence takes placc
through the physician's ability to alter re-
ferral or admitting patterns and through
mechanisms by which physicians, nurses,
and other patient care staff participate in
decisions that shape institutional policies or
operations.
DECISION MAKING IN HOSPITALS
In medical institutions, decisions about
patient care and administrative matters or
institutional policies are not independent of
each other (Shortell, 19831. Cumulatively,
physicians' decisions to admit or discharge
patients and to order particular services af-
fect many matters typically defined as "ad-
ministrative." Because the amount of
discretion and judgment that are a defining
characteristic of professional work make it
impossible for anyone else to organize and
supervise in a detailed way the performance
of professionals, control over their work in
organizations is typically exerted via the
171
power to allocate resources (Freidson, forth-
coming). (In addition, anecdotes suggest that
hospital privileges are increasingly being used
as a mechanism of control.) Although phy-
sicians are responsible for patient care de-
cisions, institutional management and
resource allocation decisions made by ad-
ministrators, managers, or trustees have
profound implications for patient care. Such
decisions determine or influence, for ex-
ample, what equipment is available, what
services are offered, how heavily and by
whom various floors are staffed, what man-
agement information system is used and for
what purposes, what kinds of utilization re-
view and pre-admission screening the in-
stitution uses, and so forth. It is hardly
surprising that conflict between medical and
administrative authority structures is a ubiq-
uitous theme in the literature on the "ne-
gotiated order" of hospitals.2
The need for institutions to control ex-
penses is by now a cliche. Some actions for
which an economic justification can be of-
fered may also improve quality of care.
However, some ways of saving money could
reduce levels of quality either in minor ways
(e.g., by reducing amenities) or in ways that
could put certain patients at increased risk.
When views conflict about matters that
affect patient care, the resulting decision re-
flects the relative power and persuasiveness
of those who have a stake in the institution.
OCR for page 172
172
The perspectives of those who are con-
cerned with some particular aspect of the
institution's functioning the staking of a
particular floor or the avaflabflity of a par-
ticular piece of equipment and those who
are concerned with the overall economic
status of the institution are both legitimate,
but are sometimes at ocIds with each other.
On matters that involve some trade-off of
cost and quality considerations (e.g., the
amount of nursing attention that will be
available to patients in an intensive care unit;
when to replace a deteriorating piece of
equipment), an institution's actions will in
some sense reflect the relative influence of
those for whom control or reduction of costs
is a high priority and those for whom the
maximization of quality (or other profes-
sional values, such as the physician's auton-
omy) is a high priority.
Several factors are increasing the power
of institutional managers. These include (1)
an increasingly competitive and complex en-
vironment, (2) the rise of professionally
managed multi-institutional systems (anc] the
consequent migration of many decisions Dom
the local to the system level), (3) the rise
among health care institutions of a "bottom-
line" orientation, (4) the development of
payment systems that put hospitals at risk
for the economic consequences of physi-
cians' patient care decisions, (5) an apparent
increase in medical institutions gaining di-
rect control by employing physicians or en-
tering into contractual relationships with
physicians that are little different from an
employer-employee relationship, and (6) Me
development both of data systems Mat en-
able institutions to monitor closely physi-
cians' patterns of care and of the will
(stemming from economic pressure) to in-
tervene when a physician's practice pattern
causes the institution to lose money. These
powerful institutional forces provide both
the means and the motivation for an ascen-
dancy of administrative power (Starr,
1983:420-4491. Finally, at some institutions
the threat that dissatisfies] physicians might
FOR-PROFIT ENTERPRISE IN HEALTH CAM
take their patients elsewhere is declining,
for reasons discussed in this chapter.
Whether changes in the relative power of
administrators (or, as they are increasingly
called in health care institutions, managers)
and physicians is a prospect to be resisted
or welcomed as overdue depends on one's
perspective. The past high degree of phy-
sician influence has been used for a variety
of sometimes controversial purposes. How-
ever, it has undoubtedly contributed to the
quality of care in health care institutions,
while also greatly complicating the job of
the administrator, contributing to the infla-
tion of hospital costs, and inhibiting many
financing and clelivery innovations in health
care. While observers might disagree about
the desirability of a shift in the balance of
power in medical institutions, there can be
little disagreement that physicians, with their
knowledge and fiduciary responsibilities to
patients, should continue to have significant
influence.
PHYSICIANS' RESPONSIBILITY
FOR QUALITY
Chapter 8 examined how physician in-
vestments and institutional incentive ar-
rangements could affect the fiduciary aspects
of the physician's role, which requires that
patient care decisions be made in the in-
terest of the individual patient. In the view
of this committee, physicians' fiduciary re-
sponsibility extends to ensuring that other
professionals or organizations to which the
physician refers patients are worthy of their
trust. This includes responsibility for the
quality of the care in hospitals or other in-
stitutions to which their patients are admit-
ted (indeed, hospital medical staffs have
formal responsibilities in this regard), or-
ganizations to which referrals for radiologi-
cal work are made or to which laboratory
samples are sent for analysis, and specialists
to whom referrals for consultation are made.
Although there have been many manifes-
tations of the medical profession's concern
OCR for page 173
PHYSICIAN INFLUENCE IN MEDICAL INSTITUTIONS
with quality over the years, the assertion of
special physician responsibility for the qual-
ity of care requires qualification on three
points. First, like all actors in all organiza-
tions, physicians have a variety of concerns
and motivations. The pressures that physi-
cians place on institutions in the name of
quality of care can be genuine, but they are
sometimes motivated by a desire to enhance
prestige, increase convenience, further
professional rivalries, protect or enhance their
economic position, and so forth. It is neither
surprising nor inappropriate that physicians'
desires for new equipment or services or for
acIditional personnel are sometimes treated
skeptically. Second, to assert that physicians
have responsibility for quality is not to con-
tend that physicians have a monopoly on
concern, knowledge, or responsibility about
such matters. Such concerns are an impor-
tant part of the values of nursing and of other
health professions. Furthermore, quality
standards must be a major concern of trust-
ees and administrators, because of Weir sense
of personal responsibility and because it could
hardly be to a medical institution's advan-
tage (economic or otherwise) to have ques-
tions raised about its quality of care.
Furthermore, several court decisions (be-
ginning with the Darling decision in 1965)
held institutions responsible for the quality
and appropriateness of care provided by the
"independent', physicians on their staffs.
Third, the involvement of referring physi-
cians is clearly not the only mechanism for
maintaining standards in a hospital. Many
other factors are involved including accrecI-
itation mechanisms, outside utilization re-
view (including professional review
organizations), the threat of legal liability in
the event of untoward events, and, at least
in some multi-institutional systems, orga-
nized quality assurance activities (often cen-
tered around the problem of risk
management) and physician advisory coun-
cils at the system level.
Nevertheless, in the committee's view,
the physicians' position of trust and exper
173
tise make it essential that they be in a po-
sition to influence standards of care. In a
substantial number of cases the physician
makes the determination of which hospital
will be used or to where a referral will be
made. Patients who follow their advice on
mese matters undoubtecITy assume that their
physician would not admit or refer them to
an institution unless he or she had confi-
dence in the quality of care. Furthermore,
because of training and access to what is
going on behind the scenes, physicians are
uniquely situated to make such judgments
on behalf of their patients.
Physicians' responsibilities for quality in
the institutions to which they refer or admit
patients may be exercised in two primary
ways. The first is through involvement in
activities that assure that quality is ade-
quate. The formal responsibilities of hospital
medical staffs, or designated members of
medical staffs, for institutional quality of care
is well recognized (Scott, 1982, JCAH, 19841.
Some evidence exists that greater physician
participation in hospital decision malting and
more highly structured meclical staffs are
positively associated with higher quality of
care (Flood and Scott, 1978; Palmer and
Reilly, 1979; Shortell and LoGerfo, 1981;
Shortell, 1983:91).
The second source of physician influence
over quality stems from their economic im-
portance as the source of admissions and
their power to change referral patterns or
to admit patients to different institutions.
The committee's case studies of physician-
hospital relationships in small cities with
several hospitals brought to light several ex-
amples of physicians using the threat or the
fact of a shift in admitting patterns to con-
vince a hospital administrator to increase
the number of nurses on certain floors, to
improve the quality of personnel in an in-
tensive care unit, or to purchase certain spe-
ciaTized equipment. While these examples
are suggestive, the literature tells little about
how often and under what circumstances
physicians change their referral or admis
OCR for page 174
174
sion patterns or seek privileges in a different
institution. Furthermore, little is known
about how often such changes occur in re-
sponse to concerns about standards or qual-
ity of care or how often other factors (e.g.,
economics) are involved.°
The two methods of exercising influence
on behalf of quality of care concerns can be
referred to, in Hirshman's terms, as "exit"
and "voice" (Hirshman, 1970~. This chapter
suggests that several forces may result in a
decline in the availability of the exit mech-
anism, and it examines what is known about
the operation of voice mechanisms in insti-
tutions with different types of ownership.
The Potential Decline of Exit
Mechanisms as a Source of Influence
Although patients receive the care that is
provided in health care institutions, the tra-
ditional customer of these institutions has
been the physician, who made the decision
of whether hospitalization was needed and
to what hospital a patient should be referred
or admitted. (This is less true of nursing
homes, however, where case workers and
hospital discharge planners make placement
decisions for a large number of patients, half
of whom have no close living relatives (Hawes
and Phillips, 1986~.3 An important source of
the physician's power and influence has been
the ability to send patients elsewhere.
Although attending to patients in more
than one institution presents physicians with
significant transaction costs, the average
physician has privileges at 2.1 hospitals
(Musacchio et al., 1986~. Having privileges
at several hospitals makes plain the possi-
bility of a change in admitting patterns. Incus,
the emergence of various types offreestand-
iIlg treatment centers has undoubtedly en-
hanced the exit option in some situations.
However, more than one-third of the phy-
sicians practicing in the United States have
privileges at only one hospital (Musacchio
et al., 1986~. Many ofthese are undoubtedly
in single-hospital communities, where the
FOR-PROFIT ENTERPRISE IN HEALTH CARE
exit option does not exist; for example, the
Hospital Corporation of America estimated
that 20 percent of their hospitals in 1983
were the only hospital in the county (Phyllis
Virgil, Hospital Corporation of America,
personal communication, March 15, 19851.
However, the increasing supply of phy-
sicians, the growth of alternative delivery
systems that control physicians' access to pa-
tients, and the predicted decline in the
number of hospitals (as a result of height-
ened competitive conditions in the industry)
are all factors that increase pressure on phy-
sicians to cast their lot with a particular in-
stitution either directly (e.g., via a joint
venture) or indirectly (through joining an
HMO or PPO).
Competition for market control is pro-
ducing various arrangements that effectively
bind physicians to particular hospitals,
thereby constraining or eliminating the exit
option. Several approaches now exist.
~ Hiring physicians in a staff capacity, ei-
ther as employees or as contractors. More
than one-fourth (27.6 percent) of hospitals
in 1982 had at least one physician or dentist
on the payroll (Michael A. Morrisey, per-
sonal communication, March 20, 1985), and
almost one in five physicians received direct
payments from a hospital in 1984 (AMA,
1984~. Such arrangements have been most
common in the hospital-based specialties
(pathology, radiology, anesthesiology), but
are likely to increase among all specialties
with the growth of alternative delivery sys-
tems (HMOs, PPOs) and with the growth
of various types of ambulatory care centers.
State medical practice laws' prohibitions
against corporate practice of medicine have
effectively precluded much hiring of phy-
sicians by investor-owned companies. lIow-
ever, these laws are coming to be viewed
as obsolete (RosoD, 1984~. Furthermore,
various types of contractual arrangements
are proliferating and can be the equivalent
of an employment arrangement in tying
physicians to particular institutions.4
~ Leasing arrangements within hospitals
OCR for page 175
PHYSICIAN INFLUENCE IN MEDICaL INSTITUTIONS
or in neighboring medical office buildings,
and the provision by the hospital of various
services (recor~keeping, billing, appoint-
ments, etc.) useful to the physician's office
practice. Data from a 1984 AMA survey show
7.3 percent of physicians to have a leasing
arrangement with a hospital (AMA, 1984~.
· The establishment by hospitals, often
in conjunction with certain physicians, of
freestanding urgent care or ambulatory care
centers that link the physician and hospital
either by joint ownership or by the fact that
the physicians who staff the centers work for
the hospital on salary or under contract.
· Rapic! growth is taking place in various
other types of joint ventures, preferred pro-
vider arrangements, and health mainte-
nance organizations that tie physicians to
particular institutions.
· Closure of medical staffs. A 1982 AMA
survey fount! that more than 90 percent of
physicians believed that their hospital al-
ready had sufficient medical staff, and 17
percent of physicians reported that a hos-
pital at which they had admitting privileges
had departments or clinical services that were
closed to appointments of new, qualified
medical practitioners (A\IA, 19821. This is
an area of likely future conflict. Hospitals
seeking to increase admissions wouIc] pre-
sumably not favor the closing of the medical
staff, and there are legal (e.g., antitrust)
problems in doing so. However, the fi~nc-
tion of granting hospital privileges resides
with the medical staff, ancI the growing sup-
ply of physicians can be expected to increase
medical staff resistance to granting of priv-
ileges to physicians not already on staff. If
closure of medical staffs becomes more
widespread, this would reduce the possi-
bility that physicians dissatisfied with pa-
tient care at one institution could seek
privileges elsewhere.
· Another tying arrangement, which ap-
pears to be developing rapidly, involves
agreements between hospitals (or hospital
chains) and large employers, whereby em-
ployees' health benefit plans give them
monetary incentives to obtain their care from
175
particular hospitals and, therefore, from the
physicians who have access to those hospi-
tals (Tatge and Wallace, 1985; Walc~ho~z,
1985~. Thus, in a reversal of traditional ar-
rangements, hospitals are increasingly gain-
ing influence over physicians' access to
patients.
If the feasibility of individual physicians
shifting their admitting patterns is indeed
diminishing, as the committee believes, then
other methods of balancing medical con-
cerns with the institution's administrative or
economic concerns become more impor-
tant. However, it should be noted that groups
of physicians such as independent prac-
tice associations, incorporated medical staffs,
or large group practices are increasingly
dealing with hospitals; the economic im-
portance of such groups may increase the
potency of the exit option. Indeed, dissat-
isfaction with existing hospitals by a sub-
stantial number of physicians or a large group
practice was a key factor in the construction
of new hospitals by investor-owned com-
panics in two of the committee's case stud-
ies. The primary alternative to the exit option
is assuring that physicians (and other health
care personnel) have an effective voice in
the operation of institutions.
The Growing Importance of Physicians'
Voice as an Influence on Institutions
Decision making in health institutions in-
volves many actors: trustees, administra-
tors, independent physicians, hospital-based
physicians, and, increasingly, nurses. Stu-
dents of organizations long saw hospitals as
professionally dominated, "doctors' work-
shops" nominally governed by a board of
trustees. "As physicians began to conduct
an increasing proportion of their practice in
hospitals after the turn of the century, the
predominant mode ofprofessionalcare in-
dependent, entrepreneurial, fee-for-service
practice-was simply extended into the hos-
pital" (Scott, 1982:2171. However, as hos
OCR for page 176
176
pitals became more technological, capital-
intensive, and complex institutions with
growing specializations and differentiation
of personnel, administrative or managerial
functions became more important. Hospi-
tals came to be described as having two lines
of authority- clinical and administrative-
or as having a demand division (the medical
staff) and a supply division (the administra-
tive staff) (Smith, 1955, Harris, 1977~. To-
day's analysts increasingly note that
competitive pressures are leading to more
interdependence between administrators and
physicians in the control of health care or-
ganizations, resulting in what Scott (1982)
calls "conjoint professional organizations" or
what Shortell (1983) calls the "shared au-
thority model."5
However, professional dominance and
sharec! authority are not the only possible
mo~lels for managing organizations in which
professionals work. Scott (1982:223) notes
other models in which "professional paAtic-
ipants are clearly subordinated to an ad-
ministrative framework," as in secondary
schools, engineering firms, and accounting
firms. The question is whether such models
may come into health care and, if so, with
what consequences. Such questions are no
longer far-fetched. There are reasons to ex-
pect continuing growth of ever larger and
more economically powerful health care or-
ganizations, as well as growing economic de-
pendency of physicians and dentists on these
organizations either because they are em-
ployees or because their access to patients
depends on a contractual relationship with
the institution.
Investor-Owned Health Care and the
Mechanisms of Exit and Voice
Most data about exit and voice mecha-
nisms in health institutions pertain to hos-
pitals. (Little comparative data of any
relevance exist about other types of health
care organizations, although it is generally
FOR-PROFIT ENTERPRISE IN HEALTH CARE
acknowledged that physician involvement
in any aspect of the operation of nursing
homes is very limited.) Although hospitals
from investor-owned systems are the pri-
mary hospital of only about 10-15 percent
of physicians who have hospital privileges
(AMA, 1983; Musacchio et al., 1986), the
growth of centrally managed multi-institu-
tional hospital systems, particularly inves-
tor-owned systems, has raised fears about
how medical concerns might be weighed
against economic or management concerns
therein, because of the combined factors of
a "bottom line" orientation and the ship away
from local control.
However, such evidence as is available
suggests that exit and voice options are par-
ticularly available at for-profit hospitals. Re-
garding exit, whereas the average physician
has privileges at 2.1 hospitals, physicians
practicing in for-profit hospitals have priv-
ileges at an average of 2.7 hospitals, accord-
ing to an ARIA survey of physicians
(Musacchio et al., 1986:Table 61. The AMA
data also show that whereas 37 percent of
all physicians have privileges at only one
hospital, this is true for only 27 percent of
physicians whose primary hospital is for-
prolSt. Finally, for-profit hospitals have par-
ticularly low levels of salaried physicians;
American Hospital Association data show an
average of 0.28 physicians or dentists on the
payroll of investor-owned system hospitals
in 1982, compared with 6-8 physicians and
dentists in freestanding or nonprofit system
hospitals and 80 in hospitals that are part of
publicly owned systems (Morrisey et al.,
1986: Table 10~.6
Thus, on the few dimensions on which
data exist, exit options now appear to be
more available for physicians practicing at
for-profit hospitals than at other hospitals.
Although no systematic data are available
about the newer arrangements that may make
the exit more difficult, the large investor
owned hospital companies have taken the
lead among hospitals in developing insur
OCR for page 177
PHYSICIAN INFLUENCE IN MEDICAL INSTITUTIONS
ance arrangements that give patients (and
therefore, indirectly, their physicians) eco-
nomic incentives to use their hospitals (Tatze
and Wallace, 19851.
Although few data are available, exit op-
tions may now be more limited for physi-
cians in nonhospital settings particularly
in the various types of ambulatory care set-
tings and in HMOs where salary and con-
tractual arrangements, reinforced by the
growing supply of physicians, may e~ec-
tively tie physicians to the setting.
Regarding voice, there are many other
mechanisms by which physician influence
might be expressed in the form of a full-
time medical director, full- or part-time de-
partment chairmen, participation in man-
agement committee meetings, and so forth.
Notwithstanding the importance of such
mechanisms, most available data pertain to
the narrower topic of board representation
in hospitals. AHA data show physician rep-
resentation on hospital boards to have been
increasing, in general" from 67 percent in
1973 to 98 percent in 1982 (Noie et al., 19831.
Physicians having voting power on hospital
boards went from 54 percent of hospitals in
1963 to "almost all" in 1983.
How do investor-owned hospitals com-
pare with other hospitals regarding physi-
cian representation on boards? Available
evidence suffers from the difficulty of mak-
ing comparisons between independent hos-
pitals and hospitals that are part of systems,
because membership on a hospital's gov-
erning board is usually a less-powerful po-
sition in a centrally managed multihospital
system than it is in an independent hospital.
Hospital boards in multihospital systems
share authority with (or yield authority to)
a corporate board on a wide variety of issues.
Nonetheless, investor-owned systems now
appear not to be the most centralized in this
regard.7 Comparisons of physician influence
in independent and system hospitals is fur-
ther complicated by the fact that a number
of multihospital systems have physician ad
177
visory boards at the corporate level that pro-
vide advice on new technologies, joint
ventures, and patient care concerns. The
evidence on voice, most of which comes from
surveys of the composition and structure of
governance bodies in institutions of differ-
ent types, should be viewed with the fore-
going caveats in mind.
· A 1982 AHA survey showed investor-
owned chain hospitals to have more physi-
cians on their boards (an average of 3.83)
than did hospitals in religious chains (1.76),
other nonprofit chains (2.13), and freestand-
ing hospitals (1.861. All of these differences
were statistically significant (Alexander et
al., 1986~.
· AElA data also showed investor-owned
chain hospitals were the most likely to have
physicians as voting members (in 91 percent
of hospitals compared with 78 percent of
religious chain hospitals, 71 percept ofother
nonprofit hospitals, and 67 percent of free-
standing hospitals (Alexander et al., 19861.
· A 1982 survey of hospital governing
board chairmen showed that while only 5
percent of hospital board chairmen were
physicians, in investor-owned hospitals 43
percent of chairmen were physicians (Ar-
thur Young, 19831.
~ In the same survey, governing board
chairmen reports of"very strong" board in-
fluence on "hospital medical affairs" were
more common in investor-owned than in
other types of hospitals, while reports of "very
strong" board influence on such manage-
ment issues as compensation of manage-
ment, mergers, capital expenditures, and so
fo - , were particularly Tow in investor-owned
hospitals, presumably because these topics
are the prerogative of corporate manage-
ment (Arthur Young, 1983~.
~ In an AMA survey in which physicians
were asked to evaluate the hospital at which
they admitted most of their patients, phy-
sicians in investor-owned hospitals were
particularly likely to report their hospital
OCR for page 178
178
administration as being"responsive" to phy-
sician concerns (Musacchio et al., 1986:Table
11~.
Obviously, membership on boards may
mean different things and may serve differ-
ent purposes-as a device for marketing, as
a medium for communication, and as a gen-
uine means for sharing power. Although
board members traditionally served impor-
tant fin-raising Functions, this is not the
case in investor-owned hospitals. Yet little
is known about the strategies at work in
structuring the boards in multi-hospital sys-
tems in general and in investor-owned hos-
pitals in particular. In their case studies the
committee's site visitors heard of instances
in which physicians used their membership
on the boards of investor-owned chain hos-
pitals to advance concerns about standards
of care in the institution, but it is also evi-
dent that membership on a board could be
used as a device by which the company
transmits its views.
Although information on the operation of
voice mechanisms in hospitals is limited, only
speculation is possible about voice mecha-
nisms in most other settings of investor-
owned health care. In instances in which
contractual arrangements exist between in-
stitutions and groups of physicians- up to
and including the entire medical staff the
relative balance of power may well make for
effective voice mechanisms. In new types of
ambulatory care centers, where it appears
that individual physicians are increasingly
being hired on salary or contract- fre-
quently in situations in which physicians are
hiring other physicians mechanisms of voice
may now be in a relatively undeveloped state.
CONCLUSION
The committee holds that physicians, in
order to fulfill} their obligations to patients,
have responsibilities to patients for the stan-
dards of care in health care organizations to
which they refer or admit them. This re
FOR-PROFIT ENTERPRISE IN HEALTH CARE
sponsibility may be carried forth better in
the settings in which the physician treats
patients rather than in settings in which the
physician has only a referral relationship.
While recognizing that those responsible for
institutional governance and management
also have an interest in and responsibility
for standards of care, the committee has ex-
amined implications of the changing struc-
ture of American health care for two broad
classes of mechanisms by which such re-
sponsibilities might be carried out by phy-
sicians by changing referral or admitting
patterns (exit options) or by participation in
institutional governance (voice options). A
change appears to be taking place in the
existing balance of power in medical insti-
tutions that may affect both types of options.
Although greater accountability by trustees
and administrators is desirable, the com-
mittee believes that there have been posi-
tive aspects to circumstances in which
institutions were concerned with retaining
the loyalty (and the patients) of physicians
who fed a fiduciary responsibility toward their
patients.
Although the growth of investor-owned
health care organizations may appear, the-
oretically, to contribute to a possible im-
balance of patient care concerns versus
economic and managerial concerns, the :lata
examined in this chapter on exit and voice
mechanisms do not show these mechanisms
to be in decline at investor-owned hospitals.
Several factors may change the balance of
power in medical institutions. These factors
include the growth of increasingly large and
powerful multi-institutional systems, en-
hanced direct administrative power over
professionals who are in increasingly plen-
tiful supply, and the rise of other arrange-
ments that effectively tie physicians to
institutions. Furthermore, hospitals, like
HMOs, are developing ways to "market
around" physicians, by selling health care
plans to large employers and by establishing
feeder systems of urgent care or primary
care centers. Thus, physicians may face a
l
OCR for page 179
PHYSICIAN INFLUENCE IN MEDICAL INSTITUTIONS
decline in their ability to change referral or
admission patterns. This suggests that
mechanisms to give physicians (and other
patient care personnel) an effective voice in
decisions that have implications for patient
care concerns will be of growing impor-
tance, if patient care concerns are to be ef-
fectively advocated in the face of growing
economic pressure and managerial power.
If physicians indeed find themselves in-
creasingly tied to particular institutions, any
lack of confidence on their part in the means
by which their concerns are made known
should lead to farther exploration of mech-
anisms by which collective pressure might
be brought. Changes that diminish physi-
cians' traditional sources of influence will
likely produce interest in new means of ex-
ercising power.8 The most likely models for
these means may be found in such devel-
opments as contractual relationships be-
tween groups of physicians and health care
providers (hospitals or HMOs), in the in-
corporation of medical staffs, or in the de-
velopment of other physician corporations
that negotiate with hospitals. As the size of
heady care organizations increases, Hey may
Snd themselves dealing with increasingly
large groups of physicians. How these groups
blend their fiduciary responsibilities with
their economic concerns is an important
question for the fixture of health care (Shor-
tell, 1985).
The committee, therefore, urges profes-
sional associations of the health occupations
to develop their own criteria for appropri-
ate modes of organizing effective partici-
pation of practitioners in monitoring and
sustaining the quality of care in the various
new forms of health care delivery and of
discouraging excessive restriction of their
voice in such issues. Because of health
professionals' knowledge, strategic location,
and, ideally, their patient-centered ethos,
their collective responsibilities on behalf of
the interests of patients and of quality of care
are increasing with the growing scale and
competitiveness of health services organi
179
cations in the United States. If the profes-
sional power and influence that can be used
in the interests of patients is used instead
for economic protection or for retarding
needed change, a key source of leadership
will have been lost for better assuring the
tempering of economic and administrative
pressure on quality of care and on the h-
ducia~ role of physicians and other profes-
sionals.
NOTES
has Anderson and Gevitz note, "Administrators who
try to contain costs . . . are commonly perceived by
physicians as impediments to progress and good med-
ical care, while they in turn are likely to view their
physicians as extravagant and unmindful spenders"
(Anderson and Gevitz, 1983:311~.
2Physicians' referral or admission patterns are un-
doubtedly affected by many factors other than concerns
about quality-convenience, prestige, habit, collegial
relationships, or availability of facilities or equipment
(Shortell, 19739. It is generally accepted that hospitals,
for example, have competed for the loyalty of physi-
cians by acquiring the latest technological innovations
and offering the broadest feasible range of services
(FinkJer, 1983; Vladeck, 1976~.
3Hawes and Phillips note that hospital discharge
planners "labor under a set of incentives in which lo-
cating an empty bed in any facility that will accept
the patient is the highest priority" (Hawes and Phil-
lips, 1986~.
4A description of many of the varieties of contractual
arrangements between physicians and institutions can
be found in the American Society of Internal Medi-
cine's "Contracting Guidelines for Internists" (ASIM,
1984~. Other organizations, such as the American Med-
ical Association, have also provided advice for their
memberships on such matters.
5Interestingly, in a study of one hospital conducted
more than 20 years ago, Perrow (1963) described a
progression through four stages of control: trustee dom-
ination, which had roots in the charity tradition; med-
ical domination, which resulted from the quantity and
complexity of medical knowledge; administrative chal-
lenge, resulting from the increased need for sound
management; and multiple leadership, which resulted
from the power struggle among trustees, the medical
staff, and administration, and which Perrow found to
be ineffective in terms of long-range planning, thereby
identifying one factor that stimulated the growth of
multi-institutional systems.
6Employment of physicians (or equivalent contrac-
tual arrangements) may be much more common in for
OCR for page 180
180
profit (and not-for-profit) settings outside of hospitals.
The issues this raises are undoubtedly important, but
are outside the scope of this study.
7A 1982 American Hospital Association survey of
multihospital systems found that the corporate board
had responsibility (sometimes shared with the local
hospital board) for many issues that are handled at the
local level by independent hospitals. The following is
a list of decision-making areas and the percentage of
corporate boards that assumed responsibility for the
decision: appointment of the hospital CEO (58 percent
of corporate boards took responsibility); transfer of as-
sets (81 percent); purchase of assets valued greater than
$100,000 (76 percent); change in hospital bylaws (80
percent); medical staff privileges (41 percent); operat-
ing budgets (73 percents; capital budgets (76 percent);
formulation of hospital strategies and long-range plans
(59 percent); service additions or deletions at hospital
(44 percent); hospital CEO performance evaluation (39
percent); appointment of local board members (66 per-
cent) (Alexander and Schroer, 1984~. However, con-
trary to the researchers' hypotheses, the study showed
that secular not-for-profit systems, rather than pro-
prietary systems, showed the "strongest, most consis-
tent relationship to centralization" (Alexander and
Fennell, 19851. On the other hand, proprietary systems
were generally more centralized than Catholic systems,
and were particularly centralized regarding CEO ac-
countability and provision of support services to local
hospitals.
8Indeed, there is a budding interest in some quarters
in unionization activities by physicians, although this
seems to be largely motivated by economic, rather than
patient care concerns (Marcus, 1984~. Under current
labor law, attending physicians' status as independent
practitioners rather than employees constitutes a sig-
nificant barrier to unionization (Freidson, forthcoming:
Chapter 7~. Although the number of employed phy-
sicians is growing, recent National Labor Relations Board
cases have interpreted physicians to be managers, rather
than employees, because physicians sit on various ad-
ministrative committees within health institutions. On
this basis, one recent court decision defined full-time
physicians as part of management and part-time phy-
sicians as employees with rights to protection under
the National Labor Relations Board Act. The industrial
model of employer-employee relations that is built into
U. S. labor laws at present does not recognize the spe-
cial position of professionals either as employees or as
private contractors who deal as individuals with in-
creasingly large and powerful organizations.
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Representative terms from entire chapter:
physician influence
