Serf or citizen: physician status and organizational structure. (Physician Executive Leadership).

OF ALL THE PLAYERS, PHYSICIANS ARE CONTEMPLATING the greatest personal transformation in the dynamic health care services industry. Those who have been self-governed may choose to surrender the power of self-determination. Some have already relinquished their agency.

As the influence of large organizations has increased,(1) some physicians have abdicated their organizational "citizenship," either partially or completely, and its consequent responsibility to contribute to governance. No doubt, the combined complexity of health care organizations, managed care requirements, reimbursement, and consolidation in the marketplace creates a daunting specter. But replacing the responsibilities of citizenship with the "decision free" existence of serfdom, at best, provides only short-term personal relief.

Consolidating markets

Historically there have always been those who wanted to consolidate, to become bigger, to control more: The Roman Empire, Soviet Empire, more recently Columbia/HCA, and MedPartners. As they grew larger and larger, they all eventually had difficulty because of objectionable autocracy, others who wanted absolute power, or the inability of the center to make good decisions that could meet the needs of the individual components of a large organization. The primary purpose of empire building has always been to benefit the center. Even "common law" England fit this description: She ruled all colonies from the center. Profits came to the center. All decisions benefited the center. That was the major objection of the colonies in North America.

In the merging and consolidating segments of health care, the situation is analogous. Consolidation of the home infusion therapy industry began in the mid-1980s. Company names no longer heard of (e.g., New England Critical Care, Critical Care America) were proclaimed the new "national" leaders as they consolidated, But during the consolidation, decision-making power moved from local and regional leaders to a national corporate headquarters. Soon decisions were made too slowly or were inappropriate for the local situation--profitability ratios dropped and bankruptcy or sellout occurred. The result was that local revenue producing people were laid-off or offices closed to benefit the center.

The media portrayed Columbia/HCA, growing rapidly through acquisition, as the "shining star." However, a variety of complications revealed in mid-1997 have resulted in this large corporation now seeking to divest itself of approximately one third of its hospitals, as well as other health care businesses. Many of these hospitals linked to the center by electronic systems, financial support, and supply contracts will suddenly have to fend for themselves: All to benefit the center. (2) A physician group sold its medical practice to Columbia/RCA looking for leadership. However, in the three and one-half years since selling their practice, nothing has been done. The practice is identified to be sold off with the hospital with which it is associated-to benefit the center. (2)

Physicians' practice trends

That the new health care environment is offering a significantly different choice and status to physicians is not obvious to all. This is evident from the following statistics:

* Among Medical Group Management Association (MGMA) member groups, the number of physicians rose by nearly 17 percent in 1996, physician-owned groups fell 10.2 percent, and the total number of practices fell by 2.2 percent. At the same time, physicians associated with hospital-owned groups jumped 23 percent. (3)

* Only 6.49 percent of medical groups were owned by hospitals in 1995, increasing to 12.44 percent in 1996. (4)

* The percent of physicians who are employees jumped from 24.2 percent in 1983 to 42.3 percent in 1994. The change in the proportion of young physicians who are employees has been even more dramatic. Physicians practicing medicine from zero to five years and working as employees increased from 37.5 percent in 1983 to 66.2 percent in 1994. (5)

* Health care analysts predict that by the year 2000, more than 25000 physicians will have sold their practices to management firms (i.e., PPMCs), compared to fewer than 7,500 in 1995. (6)

Consolidation is not the issue. In a hostile environment, forming a larger group can be beneficial. The question is what are the principles by which the new, larger group is structured and governed?

Some analysts have suggested a link between the weakening of the dominant role the medical profession plays in health care to physician practice arrangements. (5) If this is so, then the type of organization that physicians join will directly impact their professional influence and status as being more like a serf or more like a citizen. That may sound exaggerated but the difference in outcome can be vast.

Autonomy

Should the new health care environment require forfeiture of physician autonomy? Or, in the words of the economist Ludwig von Mises, "...should the citizen be transformed into a subject." (7) (iii)

The dynamic new health care environment is resulting in many mergers, purchases, and creations of medical groups. One thing that most of these new organizations have in common is that they limit physician autonomy or the ability to make choices.

It has been suggested in an article on physician autonomy that when a physician practice is sold to a large medical group, integrated delivery system (IDS), physician practice management company (PPMC), or physician hospital organization (PHO), that the physician must relinquish some medical practice autonomy relating to personal decisions, professional decisions, and all autonomy in business decisions. (8) Unfortunately, once one relinquishes the ability to decide how money is earned, collected, and spent there is little one can do about the other two areas. In other words, the reduction in autonomy that some organizations require moves one farther from being a citizen physician to being a mere employee (serf) punching a time clock and submitting RVU production reports for the day. It Is no wonder that a few physicians are thinking about unions.

Collective bargaining

Collective bargaining units such as unions may help secure pay and hours. But autonomy is also lost by joining a union. A 1996 survey searching for the most admired professions found both physicians and teachers among the top three. But next to "teachers" in parentheses was the identifier "university." That is interesting because primary and secondary teachers are considered professionals as well. What may be significant is that most are unionized. Teacher associations create many restrictions for school districts. Time in the job and union leverage appear to be more important than ability to teach or its intended outcome: Children learning.

In my community's elementary school, a young teacher had been hired as a long-term substitute when the original teacher could not teach. The substitute taught the first grade class from October to May and the original teacher never returned. According to the state education code, a long-term substitute cannot work more than 75 percent of the school year in a single classroom; otherwise, she may possibly claim rights to be rehired the next year. Six weeks before the end of the school year, she met the 75 percent threshold. The school district felt compelled to dismiss her from that classroom and hired a new substitute, uneasy that the teacher and teacher's union might force the school district to hire her permanently the next year. The first grade teacher was very concerned that a change of teachers so close to the end of the school year would be very traumatic for the six- and seven-year-old children. So, like a good professional, she volunteered to continue working without benefits, pay increase, or the rig ht to be rehired in a permanent position the following year. However, the school district, timid because of union sponsored wording in the state education code, was unsympathetic and refused, "for her protection," to let her "volunteer."

Do physicians provide volunteer services in the community? Absolutely. The spirit of service in medicine is legendary. (9) Do physicians provide free or discounted patient care when they deem it appropriate? Absolutely. Would physicians want detailed hiring practices codified at the state level? Would a collective bargaining unit ever require a physician to go on strike and ignore the Hippocratic Oath during negotiations? They claim they won't. A union did for air traffic controllers (also against the law). In 1997, a physician organization in Puerto Rico voted to strike. (10)

The roots of collective bargaining can be found in the worthy pursuit of trying to right the bad treatment of employees by an autocratic "management." But unions have been unable to shed their self-interested behavior in order to work for the benefit of the organization and its customers. Recent (1996) California propositions to put large financial penalties on reductions of hospital beds and hospital mergers were union sponsored with the objective of keeping nurse employment at a status quo. Patients and other health care payers would have been penalized had these propositions been passed. Being a serf employee or a serf union employee is not much different. A union does provide a sense of security. But is serfdom worth it? Has it been worth it to teachers or, more importantly, to our children?

Some requirements to form a collective bargaining unit include: (1) only 30 percent of eligible physicians are necessary to call for an election; and (2) the collective bargaining unit wins the right to represent 100 percent of physicians with only a simple majority of those voting in favor. (11) These rules are some indication of how only a few can control the majority in a collective bargaining unit.

Even when collective bargaining units start out as fairly unified, democratic bodies aimed at strengthening the supposed weak individual in negotiations, they eventually lead to central autocracies aimed at whatever those in power desire. Serfdom is the direction to which collective bargaining units lead.

Industrialization or medicine

An interesting phenomenon in the health care industry is that it seems to be following the path of the industrialization of business earlier in this century. However, for well over a decade, innovative businesses have been trying to rid themselves of the centralized management techniques and organizations that were formed during that period.

As we contemplate the growing industrialization of medicine and its effect on physicians, we should consider the effect of the industrialization of business on workers near the turn of the century. As the semi-independent foreman was brought into the new, growing, industrialized corporation as an employee (to gain "efficiency"), he found, over time, that not only did he lose autonomy and authority, but he lost status in the community. (12) (170) In exchange for some financial security, he had to surrender decision-making authority, independence, hiring authority, and perhaps partnership arrangements, therefore losing status and influence in the community.

One observer of the corporatization of business stated, "The very means which strengthen the corporation and which render it more efficient must also promise to bring about substantial realization of the basic beliefs and basic promises of our society." (12) (134) As is clearly stated in U.S. historical documents, our society is primarily seen as "local" with decisions made by local citizens. The basic promises of our society include, but go far beyond, financial issues.

We should also be aware that throughout the 20th Century, the concept of centralizing management has been acclaimed, observed, evaluated, tested, and, ultimately, questioned as being the most effective. A study of merged corporations revealed that, "Although the economics of resource sharing seem straightforward, in practice the combination of operating resources brings with it a 'cost of compromise.' The overall economic benefits of resource sharing need to be balanced against any loss of effectiveness in their use." (13) (30) The authors of the study also concluded that, "...the only real distinctive competence is in the ability to mobilize an organization to form new combinations of capabilities continually and to renew them." (13) (23-24) It is precisely this competence that corporate America has been unable to create in their large centralized structures and, hence, is forsaking in favor of a grouping of smaller, more autonomous sub-units.

As far back as 1977, a study found that among eight different kinds of medical specialties, economies of scale were quickly reached as physicians moved from solo to group practice. The larger the group and more centralized its decision-making, the more inefficiency crept into the organization. (14) In other industries, new technology has allowed smaller corporations to thrive as equal competitors to their behemoth rivals. (15) Meanwhile in health care, we have used technology not only to organize centrally controlled large medical groups, but to justify the centralized management of hundreds of medical groups spread across many states.

Numerous forms of new health care models have emerged over the last two decades to "integrate" the physician into some form of network. The general model itself does not intimate whether a physician will be more of a serf than a citizen. However, a requirement to sell the medical practice does move a physician toward serfdom, since the right to decide practice operations issues is also sold. A physician will always have influence, but will not have a citizen's right to choose if the practice is sold.

A recent survey indicates that integrating physicians is the "most difficult aspect" of building an integrated delivery system. Most executives say that doctors are skeptical of and resistant to any change in their traditional economic relationships. (16) I would suggest that this skepticism is rooted in the underlying instinct of physicians that the new relationships offered for their "integration" will result in the loss of decision-making rights that have typically been protected in their status as full fledged "citizens" of their medical practice.

Citizen companies

Physician anxiety over new organizational structures and the physician's role in those organizations are really concerns over the rights of "citizenship" that they will retain or surrender. However, the stress of financial stability in a dynamic and changing health care industry often eclipses the rights of citizenship as preeminent.

A large multi-specialty medical group in the Midwest sold its practice. ancillary services, and HMO in the past year to a health system and an insurance company. The group's board chairman gave his reasoning as, "It will generate more opportunities for growth, and over time, will provide the security that comes from affiliation with the leading provider network and managed care organizations in the area." (17) The group's president was quoted as saying, "Hospitals seem to have an unlimited supply of money to subsidize their physician groups. (18) A typical appeal to physicians Is reflected in another medical group executive's statement that, "Physicians want to do what they're trained to do and that's practice medicine, not business. A way to handle that is to sell your practice to an organization that will take care of it. (19) Yielding one's decision-making rights by relinquishing citizenship status in exchange for privilege and "security" so that someone can "take care of" you is moving toward serfdom. (7) (94)

Physicians have traditionally practiced medicine in various "communities." These include medical group partnerships, joint ventures, IPAs, hospital medical staffs, medical associations, specialty societies and extend to community boards, hospital boards, and charitable organizations. It is the local leadership in each of these communities that collaborates to create a larger, prosperous, more beneficial society for all involved. Physicians have shared the leadership responsibilities in these communities. "To have community you must have people prepared to shoulder responsibility, to be accountable; otherwise, you have lots of feelings about wanting to do good, but these evaporate like the early morning's dew at the first sign of difficulty." (20) By removing physicians from a citizen's role in practice government and its natural extension into other aspects of medicine and local society, "community" will probably be lost within a generation. This will directly influence the medical community's future, since t here is recent evidence that "community" is essential to prosperity. (21,22)

What is a citizen?

Aristotle's reflections on the meaning of citizenship in a state will help us to understand what a citizen of a company should be: "He who has the power to take part in a deliberative or judicial administration of any state is said by us to be a citizen of that state..." (23) (81)

For this to be the case, an organization's structure must permit physicians to be involved in such a way that they can directly impact the organization's administration primarily locally. A citizen is one who both participates in an organization's decision-making process, as well as in its fruits. Participation in decision-making need principally be at the local level. True citizen participation requires time commitment as well as resource commitment. A true citizen self-governs.

Conclusion

Physicians are in a unique position. Until recently, the majority of physicians in this country have practiced independently, exercising their economic and clinical decision-making authority. They have the basic essential background to come together as a group and be successful: That is, experience in economic self-reliance and individual, voluntary commitment to the virtues of the Hippocratic Oath. Some are already doing it. The founders of a medical group in Oceanside, California, are looking beyond their own career life. Rather than sell their group as they retire, they are rewriting their "constitution" to prepare their organization to perpetuate itself through a structure of self-governance for the benefit of those that remain.

Principles of self-governance have been successfully practiced by a few large organizations for more than 150 years. These principles allow any organization to grow large and prosperous well beyond any other of its kind. They permit a self-perpetuating structure that offers more autonomy, personal development, economic self-reliance, and opportunity to contribute than any other kind of structure: That is, they provide and require true citizenship.

When a physician looks at where to practice medicine, what organization to form, or what company to join, look for the principles in Table 2. The fewer found, the fewer that are protected, the more likely one is heading toward serfdom. However, the more principles found, the more likely it is that one will have the invigorating environment and responsibility found in a citizen company.

TABLE 1

SERF OR CITIZEN?

Below are several questions which will help physicians discover whether
the principle of a citizen company are present and steadfast in their
organization's structure:


1.  Who owns the practice? If physicians are owners, how long does
    ownership take to achieve? Does ownership include
    business decision-making rights?

2.  If the physicians belong to a professional corporation, does
    it own its practice or simply contract to furnish
    provider services? Is the arrangement
    exclusive to one entity?

3.  Do leaders in the practice serve in their positions by
    consent? What is the process for selection and removal
    of those who sit on the board of directors/trustees?

4.  Are appropriate tools and resources provided to physicians
    so they have the means to accomplish the objectives,
    aims, and mission of the organization? Are there tools in
    place to help physicians measure how well they are
    meeting the organization's objectives?

5.  Is there a process for accountability to the organization's
    leaders and to the physician's peers? Does headquarters
    "judge" you from your reports or utilize
    them to identify resources for your use?

6.  What decisions are made at the highest level of the
    organization? What decisions are made at the lowest
    level? With appropriate tools, how many of the decisions
    made at higher levels could be made at lower levels?

7.  Does the organization offer everyone opportunities to
    participate as a decision-maker on a committee, special
    task force, board, or executive committee? Are
    these opportunities few? Are members of
    organizational committees and task
    forces primarily confined to headquarters personnel?

8.  Do organization headquarters personnel evaluate all
    new opportunities and then pass down decisions for
    implementation? What happens to opportunities identified
    at lower levels of the organization?

9.  Does headquarters have a major role to provide
    resources for teaching the overall mission of the
    organization and to provide the tools that facilitate its
    accomplishment or does it primarily function as the
    central source of decision-making?

10. Are the chairman of the board and CEO different people?
    How are board members appointed? How is the
    CEO appointed? Is the CEO a voting
    member of the board?

11. If a member of a multi-site or multi-divisional
    organization, does the local mission and the
    headquarters mission match in actual practice? Do local
    leaders make the final local decisions?

12. Does the CEO or other very senior leaders visit and teach
    sub-units their role in accomplishing and their
    impact upon the overall organization mission?

13. What influence do the virtues found in the Hippocratic
    Oath have on decisions made in the organization? Does the
    mission of the organization incorporate the Hippocratic
    Oath? Do the leaders of the organization, local and
    distant, personally exemplify its virtues?

                                        Brent Alan Fisher, MBA

Table 2

ORGANIZATIONAL PRINCIPLES OF SELF-GOVERNANCE

What is the structure of a citizen organization?
What does one look for? Below are principles, (24)
which, if applied and practiced in an organization,
will provide a physician, moving from a solo or small
partnership practice to a larger organization,
the agency, rights, and responsibilities previously
enjoyed. They will also provide the new physician
a sense of autonomy and agency in the practice
of medicine.

Subsidiarity

The most important of these principles is subsidiarity
or "let them govern themselves." It means that decisions
should be made at the lowest possible point. It also
involves consent. That is decisions, especially about
who should lead, should be consented to by those led.

It requires those who lead to provide training and
tools so that physicians and others may act and decide
with maximum effectiveness. Subsidiarity assumes that
those up top and far away may not know better.

Interdependence

Citizenship requires participation. Physicians have
traditionally passed the baton of leadership on to
colleagues on a regular basis: Everyone shares the burden
and opportunity that comes with sitting on or leading
a committee, task force, medical staff, or board. This is
important in the development of the individual so that
competent leaders exist throughout the organization.

It allows new opportunities to be taken advantage of without
creating permanent overhead structures.

Uniform way of interacting

A uniform way of measuring and accounting for stewardship
responsibilities is important in an organization that
provides for significant autonomy. However, this
"accounting" is not to the center but within the sub-units.

It requires those at the center to teach sub-unit
relationships, general policies, and overall mission so all
sub-units move together in the direction of the
organization's purpose.

Separation of powers

This principle prevents over concentration of
decision-making in one part of the group. This means there
must be real authority given to the board and the CEO.
And they must be separate entities. The principle of
separation of powers protects decision-making at
the lowest level.

Twin citizenship

The principle of twin citizenship implies belonging to more
than one entity. The challenge of an organization of numerous
sub-units is that its purpose, mission, and direction must
live in all the decisions made by each leader and individual
throughout the organization at every level.

The principle of twin citizenship requires leaders at the
center who can lead by serving, teaching, and persuading. It
requires leaders who can show a bigger picture to all the
sub-units, how their role fits into that picture, and how
their local decisions affect it.

Virtue

The ancient Greeks knew that the principles above could
not exist for long without citizens that practiced
self-mastery over personal appetites. It is both
the individual and professional commitment
to the virtues of the Hippocratic Oath that has
allowed physicians to avoid intrusion into
their medical decision-making and to continuously be
considered one of the most respected professions.
Selling one's practice to an entity not voluntarily bound
to the virtues of the Hippocratic Oath portends ill will
for the future of patients and physicians.

Organizations that protect the individual's ability to
decide and act in a fairly autonomous manner must also
encourage and expect, from that individual, a
self-assertive behavior that keeps the good of the patient
and the whole in mind. Aristotle teaches us that, "...a
citizen is one who shares in governing and being
governed....(I)n the best state he is onewho is able
and willing to be governed and to govern
with a view to the life of
virtue." (23) (104) It is precisely the physician's
historical "view to the life of virtue" that has permitted,
in general, the business of medicine and the practice of
medicine to coexist and seek temperance in the profit
motive. (25)

A lack of these minimal virtues must eventually give
way to despotism in organization managment. (26)

                                        Brent Alan Fisher, MBA

References

(1.) Burchell, R.C., White. RE., Smith, H.L. and Piland, N.F. Physicians and the organizational evolution of medicine. JAMA. 1988:260:826-831.

(2.) Columbia empire begins to shrink. AMN. January 5. 1998:41:1,27.

(3.) Medical Group Practice Digest 1997. Little Falls, New Jersey: HLS Management Systems: 1997. Hoechst Marion Roussel Managed Care Digest Series.

(4.) Physician Compensation and Production Survey: 1997 Report Based on 1996 Data. Englewood. Colorado: Medical Group Management Association: 1997.

(5.) Kletke, P.R., Emmons. D.W., and Gulls, K.D. Current trends in physicians' practice arrangements: from owners to employees. JAMA. 1996:276:555-560.

(6.) Executive Chartbook: Physician, deal thyself. Hospitals and Health Networks. January 20, 1997:42.

(7.) von Mises, L. Bureaucracy. New Rochelle, New York: Arlington House. 1969.

(8.) Nelson, R.A. Knowing what we mean by wanting autonomy. MGM Journal. July/August 1996:43:17-21.

(9.) Spirit of service. AMN. June 2, 1997;40:21, editorial.

(10.) Mitka, M. Puerto Rican physicians settle antitrust charges. AMN. October 27, 1997:40:4.

(11.) Larkin, H. Illinois doctors organize to protect care: AMA backs it. AMN. November 3, 1997:40:1,22-23.

(12.) Drucker, P.F. Concept of the Corporation. New York, NY: The John Day Company, 1946.

(13.) Haspeslagh, P.C., Jemison. D.B. Managing Acquisitions: Creating Value Through Corporate Renewal. New York, New York: The Free Press, 1991.

(14.) Kimbell, L.J. and Lorant, J.H. Physician productivity and returns to scale. Health Services Research. Winter, 1977:367-379.

(15.) Peters, T. Liberation Management: Necessary Disorganization for the Nanosecond Nineties. New York. New York: Alfred A. Knopf, 1992.

(16.) Japsen, B. The reluctant doctor. Modern Healthcare. September 1, 1997:66.68.

(17.) Advocate Health Care and Blue Cross & Blue Shield of Illinois negotiate for purchase of Dreyer Medical Clinic and Dreyer Health Plans. Advocate Health Care News Release. February 12, 1996. http://www.advocatehealth.com/news/dreyer.html (17 Dec 1997).

(18.) Larkin, H. Flexibility boosts group's survival. AMN. August 4, 1997:40:7-8.

(19.) Dunevltz, B. Survey reports expanded integration among practices. MCM Update. December 15, 1997:36:2.

(20.) Elshtain, J.B, "Democracy at century's end." Presented at a Brigham Young University Forum: October 29, 1996; Provo, UT. http://advance.byu.edu/devo/EishtainF96.html (17 Dec 1997).

(21.) Pennar, K. The ties that lead to prosperity. Business Week. December 15. 1997:153-155.

(22.) Mueller. T. A town where cooperation Is king. Business Week. December 15. 1997:155.

(23.) Aristotle, Politics and Poetics, translated by Benjamin Jowett and S.H. Butcher. New York, New York: The Heritage Press, 1964.

(24.) Handy, C. Balancing corporate power: a new federalist paper. Harvard Business Review, November/December 1992:59-72,

(25.) Emanuel, L. Bringing market medicine to professional account. IAMA. 1997;277:1004-1005.

(26.) West, T.G. Vindicating the Founders: Race, Sex, Class, and Justice in the Origins of America, Lanham, Maryland: Rowman & Littlefield Publishers, Inc., 1997.

Brent Alan Fisher, MBA, is Assistant Clinical Professor at Loma Linda University- Schools of Public Health & Medicine, and Administrative Director at Loma Linda University Medical Center in California. He can be reached by calling 909/824-0800 ext.81505, via fax at 909/478-4121, or via email at [e-mail].