Strategic alliances between physicians and hospitals in multihospital systems

Regional consolidation is one of the most frequently prescribed remedies for the ills facing hospitals today. Overcapacity, net revenue erosion, poor financial positioning, and high costs are some of the factors driving consolidation. One of the greatest challenges for multihospital systems is to align the interests among physicians practicing at the member hospitals and the system's corporate strategy (Hospitals 1990). This article offers a framework for analyzing these problems based on the economics of agency relationships and applies the framework to two case studies of strategic alliances between hospitals and physicians in a multihospital system. Both are examples of the physician-multihospital organization.     

Strategic interaction among hospitals and nursing facilities: the efficiency effects of payment systems and vertical integration

Rising post-acute care expenditures for Medicare transfer patients and increasing vertical integration between hospitals and nursing facilities raise questions about the links between payment system structure, the incentive for vertical integration and the impact on efficiency. In the United States, policy-makers are responding to these concerns by initiating prospective payments to nursing facilities, and are exploring the bundling of payments to hospitals. This paper develops a static profit-maximization model of the strategic interaction between the transferring hospital and a receiving nursing facility. This model suggests that the post-1984 system of prospective payment for hospital care, coupled with nursing facility payments that reimburse for services performed, induces inefficient under-provision of hospital services and encourages vertical integration. It further indicates that the extension of prospective payment to nursing facilities will not eliminate the incentive to vertically integrate, and will not result in efficient production unless such integration takes place. Bundling prospective payments for hospitals and nursing facilities will neither remove the incentive for vertical integration nor induce production efficiency without such vertical integration. However, bundled payment will induce efficient production, with or without vertical integration, if nursing facilities are reimbursed for services performed.     

Improving linkages between family physicians and hospitals

Hospitals, as social pillars and hubs of medical activity, can be a great influence and supporter of family physicians and primary healthcare, which will in turn improve the health of their communities. This paper discusses general linkages between family physicians and hospitals and the development of a specific program to enhance these linkages created at a large community hospital in Ontario.     

Strategic market planning for hospitals

The application of strategic market planning to hospital management is discussed, along with features of the strategic marketing management process. A portfolio analysis tool, the McKinsey/G.E. Business Screen, is presented and, using a large urban hospital as an example, discussed in detail relative to hospital administration. Finally, strategic implications of the portfolio analysis are examined.     

Ethical considerations for business relationships of hospitals and physicians

As more hospitals and physicians seek to establish joint business-based ventures, their ethical consequences are being sidestepped. As a result, the traditional ethical expectation of a patient's well-being as the primary concern in providing medical care appears to be replaced by hospital and physician financial interests. So legislation is likely to be enacted to prevent any business relationships between hospitals and physicians.     

Job satisfaction of physicians in academic and general hospitals

Based on a study of 20 medical departments (general surgery, internal medicine, radiology) an analysis is presented of variables which may account for differences in work satisfaction. The results show: (a) (experienced) work load correlates negatively with work satisfaction; (b) satisfied physicians define their medical domain more broadly than dissatisfied physicians. Besides, they do not regard their salary as an important aspect of their work. In general, radiologists are most satisfied with their work, internists least; medical specialists are more satisfied than residents. In the discussion it is argued that hospital physicians prefer regularity in their work, combined with a professional work climate. In terms of the growing bureaucratization of the physician's work it is concluded that satisfaction is positively influenced by standardization of work processes and negatively by external pressures which limit professional autonomy.     

Control and support: what physicians want from hospitals

It has been asserted that physicians hold the key to success in hospital efforts to increase admissions and contain costs. While there is a great need to forge a partnership with the medical staff in achieving mutual goals, little is known about what physicians want from hospitals. A survey was completed by 177 physicians in two Cleveland-area hospitals that assessed their preferences on issues concerning hospital governance and control, hospital services, and hospital employment of physicians. Results showed that physicians want greater involvement in hospital decision making and desire services that facilitate their practice of medicine. Responses varied significantly according to physician age, specialty, HMO participation, and multiple-staff membership. Greater effort on the part of hospital administrators to assess and understand medical staff needs is suggested.