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Solving physician-hospital administration conflicts: a physician strategy for the 90s.

Today's health care climate creates increased potential for conflict between hospital administrators and hospital-based physicians. Voluminous regulations, increasing operating costs, professional liability exposure, changing methods of reimbursement, constraints on capital expenditures, and similar constraints on bed expansion have caused hospitals to explore new and innovative sources of revenue. Hospitals have become more eager to provide "bundled" services and health care "packages" in order to compete for discounted reimbursement contracts demanded by large-volume purchasers.[1] While the impact of these changes is clearly felt in the private sector, similar fiscal constraints also may require university hospitals to modify their traditional role as leaders in education, research, and community service.[2] In short, all hospitals are under intense pressure to increase revenues, reduce operating costs, and maintain the scope and quality of services provided.[3]

In the current health care environment, the historic role of the physician as controller of the delivery of health care services has been superseded by an expanding cadre of corporations and corporate-style hospital administrations.[1] In addition to loss of control over delivery of their services, hospital-based physicians may be subject to unique economic pressures from hospital administration (table 1, page 40).[4] Such pressures are intended to make the physicians more direct participants in hospital administration's overall economic strategies. Hospital-based physicians view these pressures as unreasonable affronts to their traditional autonomy; physicians' submission to these pressures is viewed by hospital administration as essential to the continued financial success of the institution. Methods of solving such conflicts may be inadequately addressed in the traditional medical staff bylaws.

In 1985, the AMA-AHA Joint Task Force on Hospital-Medical Staff Relations issued recommendations regarding the relationship between a hospital and its organized medical staff.[5] Many of the recommendations also have been addressed in the Accreditation Standards of the Joint Commission for Accreditation of Health Care Organizations (JCAHO).[6] The JCAHO standards require that the hospital governing body and the medical staff agree on a set of medical staff bylaws. The bylaws are mandated to include due process and fair hearing rights for members of the medical staff whose clinical privileges are challenged. However, due process and fair hearing rights are intended primarily to address quality of care issues, and their implementation is a lengthy and expensive process.

Hospital concerns regarding hospital based-physicians often will be driven by economic rather than by quality of care issues. Hospitals, therefore, often desire more expeditious mechanisms for solving economic conflicts than the due process mechanisms customarily included in the medical staff bylaws. One solution is for the hospitals to negotiate exclusive contracts outside the medical staff bylaws. Under the terms of such a contract, the hospital-based physician or group agrees to become a limited participant in hospital administration's economic strategy in exchange for exclusive rights to provide certain medical services within the hospital for a specified time.

However, an exclusive contract need not always be the goal. The crucial concept is that hospital-based physicians should seize every opportunity to negotiate with the hospital as to the best method of resolving economic conflicts. Only in the face of proven mutual or unilateral lack of confidence[7] is negotiation an undesirable method of conflict resolution. When conditions do exist that make negotiation unlikely, hospital-based physicians may be faced with no alternatives but to leave or challenge hospital administration legally. However, there are significant incentives for both hospital administration and hospital-based physicians to negotiate.

Many reports have emphasized the negative aspects of confrontation as a solution to conflict and attested to the advantages of the physician-manager partnership.[8-11]. By negotiating, the hospital will be perceived as eager to preserve the existing working relationship between hospital-based physicians and primary care physicians. Legal challenges and consequent adverse publicity will be avoided. Moreover, it has been shown that hospital resources are better managed through an understanding,[12] qualified,[13] and involved[14] medical staff. On the other hand, if negotiations fail and the group decides to leave, finding equally qualified physicians may be difficult. There are indications that there will not be a surplus of most hospital-based specialties for the foreseeable future.[15,16] In addition, expanding demands of patient care[14] and administrative duties[17] on physicians' time increase the perception of a shortage of many hospital-based specialties. On a similar note, the community ties formed by physicians and their families may make leaving an undesirable alternative. Furthermore, while the physicians may not understand or agree with hospital administration's economic strategy, they do understand that, should they elect to stay, their economic viability is ultimately aligned with that of the hospital. There is, therefore, an increasing need for hospitals and physicians to develop an attitude of mutual respect and understanding, with both parties taking an active role in shared planning of delivery of health care services.

Some hospital chief executive officers (CEOs) are hired or retained in spite of a lack of individual personnel management and negotiating skills.[18,19] The evolution of the physician executive as a hospital administration-medical staff liaison has increased the hospital administration's ability to bridge such deficiencies and form more effective lines of communication with the medical staff.[20-23] A successful medical director clearly must possess effective negotiating skills.[24]

It is time physicians learned from hospitals. It is unusual to find personnel management and hospital economics courses as a part of medical school or residency training curriculums. While congeniality is generally recognized by physician groups as an important character attribute for potential new associates, the possession of management skills and an understanding of health care delivery issues are rarely considered essential prerequisities. As the necessity to deal effectively with hospital administrations becomes more important to physicians, management training should be a consideration in choosing future clinical leaders (table 2, page 41).

Specifically, because hospital-based physician are more likely to be subjected to unique economic pressures from hospital administration, hospital-based groups' attraction of clinical associates with management training should be of paramount importance. If all group members have little understanding of health care issues and lack management and negotiating skills, the group is automatically placed at a disadvantage in its dealing with hospital administration. The effectiveness of the clinical physician executive will depend on the group's willingness to support the concept financially and allow the new associates to assume duties proportionate to their expertise. The duties should include expanding the group's awareness of health care delivery issues, improving the group's management skills, overseeing the group's quality assurance program, and managing conflict/crisis situations.

By attracting, supporting, and making effective use of management-trained clinical associates, hospital-based physicians place themselves in a more attractive position as communicators and negotiators with hospital administration. Adopting such a strategy should result in a declining use of confrontation as a method of conflict resolution, in more win-win partnerships between administration and hospital-based physicians, and in more effective delivery of health care services.


[1.] Burchell, R., and others. "Physicians and the Organizational Evolution of Medicine." JAMA 260(6):826-31, Aug. 12, 1988.

[2.] Lerner, W. "The Effect of Competitive Environments on University Hospital-Medical Faculty/Staff Relationships." Medical Care Review 46(4):387-409, Winter 1989.

[3.] Klint, R. "The Revolution Revisited." Physician Executive 16(2):6-7, March-April 1990.

[4.] Connors, E. "The Future of the Pathologist in the Hospital Setting." Archives of Pathology Laboratory Medicine 110(4):280-3, April 1986.

[5.] The Report of the Joint Task Force on Hospital-Medical Staff Relationships. Chicago, Ill.: American Medical Association/American Hospital Association, 1985, p.37.

[6.] Accreditation Manual for Hospitals. Oakbrook Terrace, Ill.: Joint Commission for Accreditation of Healthcare Organizations, 1980, p.98.

[7.] Clarke, R. "Physician Contracts: New Issues Hit the Bargaining Table." Hospital Medical Staff 8(2):11-7, Feb. 1979.

[8.] Raelin, J. "Understanding Can Help Physician-Manager Relations." Modern Healthcare 17(21):78, Oct. 9, 1987.

[9.] Simendinger, E., and Pasmore, W. "Developing Partnerships between Physicians and Healthcare Executives." Hospital and Health Services Administration 29(6):21-35, Nov.-Dec. 1984.

[10.] Green, J. "Shared Planning: A New Foundation for Quality Criteria." Physician Executive 15(3):15-7, May-June 1989.

[11.] Sheldon, A. "Physician-Administrator Cooperation in the Postprofessional Era." Physician Executive 14(5):2-7, Sept.-Oct. 1988.

[12.] Griffith, J., and others. "Practical Ways to Contain Hospital Costs." Hospital Financial Management 29(1):46-54, Jan. 1975.

[13.] Radecki, S., and Steele, J. "Effect of On-Site Facilities on Use of Diagnostic Radiology by Non-Radiologists." Investment Radiology 25(2):190-3, Feb. 1990.

[14.] Rooney, J. "Financial Success Requires Increased Physician Involvement." Healthcare Financial Management 40(9):301,34-8, Sept. 1986.

[15.] Orkin, F. "Critique of the Bureau of Health Manpower Estimates of the Need for Anesthesia Manpower." Medical Care 16(10):878-88, Oct. 1978.

[16.] Bowman, M., and others. "Estimates of Physician Requirements for 1990 for the Specialties of Neurology, Anesthesiology, Nuclear Medicine, Pathology, Physical Medicine and Rehabilitation, and Radiology." JAMA 250(19):2623-7, Nov. 18, 1983.

[17.] Kindig, D., and Dunham, N. "How Much Administration Is Today's Physician Doing?" Physician Executive 17(1):3-7, Jan.-Feb. 1991.

[18.] Eubanks, P. "The New Hospital CEO: Many Paths to the Top." Hospitals 64(23):26-31, Dec. 5, 1990.

[19.] Brady, G., and Helmich, D. "The Hospital Administrator and Organizational Change: Do We Recruit from Outside?" Hospital and Health Services Administration 27(1):53-62, Jan.-Feb. 1982.

[20.] Garko, M. "Persuasion Strategies for Physician Executives: Part I--Influencing Superiors." Physician Executive 16(6):9-13, Nov.-Dec. 1990.

[21.] Garko, M. "Persuasion Strategies for Physician Executives: Part II--Influencing Subordinates." Physician Executive 17(1):31-5, Jan.-Feb. 1991.
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Title Annotation:Medial Staff Relations
Author:Cross, David A.
Publication:Physician Executive
Date:Nov 1, 1992
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