Beyond the Bylaws: Hospital-Physician Relationships, Economics, and Conflicting Agendas

People should think things out fresh and not just accept conventional terms and the conventional way of way of doing things. In 2003 the Seattle based retailer, Nordstrom, opened a new store on Chicago's trendy North Michigan Avenue. Unlike the department stores of old that carried a vast array of consumer goods, the new Nordstrom is a large shoe store, accompanied by a number of small cosmetic and clothing departments. 2 The Michigan Avenue Nordstrom is one small example of how the retail industry has been, and continues to be, shaped by various external forces in the consumer marketplace. While hospitals, with their unique blend of human resources, technologies, services and products, are far more complex organizations than department stores, they share a commonality in as much as they too have been profoundly impacted by market forces, which have shaped their structures and operations. Even a cursory examination of hospitals in the last twenty-five years demonstrates that the acute care facility of the early twenty-first century, like a department store, is contained in a far different structure than the hospital model which emerged post-World War II. Not only have hospitals undergone dramatic internal changes, but since the 1970s they have been moving services out of inpatient settings and have developed a wide array of affiliated, focused, outpatient service delivery programs. Unlike retail establishments, however, the structural evolution of hospitals driven by external markets is complicated by the presence of regulation, which paradoxically both sparks and impedes change. Unquestionably market forces, and in some cases regulations, have been catalysts for reshaping the structure of the American hospital. But to a large extent the regulatory system has been a major factor in protecting the structures of hospitals, retaining structural elements in the face of market forces, which, unchecked, may have even further eroded core features of the hospital. From a legal standpoint, the corporate structure of hospitals, best typified by its tripartite arrangement of board, medical staff, and administration, has remained a constant in the midst of the evolving complexities in acute care facilities. It is the contention of this article that the permanence in the corporate structure of hospitals, reflected in the tripartite arrangement is only a veneer under which profound changes are occurring, demonstrating that even the core features of general hospitals are being altered by market forces. In particular, the manner in which physicians relate to hospitals is changing, …