Solving physician-hospital administration conflicts: a physician strategy for the 90s - Medial Staff Relations

Physician Executive, Nov-Dec, 1992 by David A. Cross

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care environment, the historic role of the physician as controller of the delivery of health care services has been superseded by an expanding cadre of corporations and corporate-style hospital administrations.[1] In addition to loss of control over delivery of their services,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.