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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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. REFERENCES Alexander, Jeffrey A., and Mary L. Fennell (1985) Power and Decision Making in Multidivisionalized FOR-PROFIT ENTERPRISE IN HEALTH CARE Forms: The Case of Multihospital Systems. Unpub- lished Paper. Chicago, Ill.: Hospital Research and Ed- ucational Trust. Alexander, Jeffrey A., Michael A. Momsey, and Ste- phen M. Shortell (1986) Physician Participation in the Administration and Governance of System and Free- standing Hospitals: A Comparison by Type of Own- ership. This volume. 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