Dobrzykowski and McFadden Examine Hospital Governance

American hospitals house a unique power dynamic. Nowhere else do you find such important figures who influence organizational performance, but may not necessarily be employees of the facilities in which they work. Many physicians are independent contractors who are afforded a great deal of job-related autonomy and often have different priorities from those of hospital executives. Healthcare executives sometimes struggle to find ways to get doctors to support initiatives such as cutting costs by eliminating both waste and non-value added activities as part of a lean strategy. Many hospital executives have recently begun employing physicians partly out of the belief that doing so will make them more aligned with the hospital. But how effective is that strategy? That’s one of the questions David D. Dobrzykowski (University of Arkansas) and Kathleen L. McFadden (Northern Illinois University) address in “Examining Governance in Hospital Operations: The Effects of Trust and Physician Employment in Achieving Efficiency and Patient Satisfaction.” They examine the respective roles of physician employment (formal governance) and trust (informal governance) in aligning doctors’ goals with those of hospital executives. They find that simply employing physicians is not enough. That employment must be combined with trust in order to produce improved physician support of executives’ goals. Their study has implications for healthcare executives, policymakers, and researchers.

Dobrzykowski and McFadden define trust as “[healthcare executives’] willingness to rely on an attending physician in whom one has confidence and a belief of integrity.” It “is engrained in past behavior of honesty and openness, not taking advantage of the hospital’s vulnerabilities, and earning confidence through clinical practices.” To determine how that informal form of governance coexists with the formal governance inherent in physician employment, they surveyed professionals from 302 American hospitals and compiled 583 data points. They analyzed that data using moderated structural equation modeling and triangulated their results via practitioner interviews. They find that the combination of trust and physician employment can help produce executives’ desired results in lean strategy implementation, process integration, operational efficiency, and patient satisfaction. Neither trust nor physician employment alone were enough to enhance those effects.

This study offers insights to healthcare executives, policymakers, and researchers. It shows hospital executives that they should not overlook the importance of relationships after a physician is hired. It also demonstrates that relationship building alone is not sufficient to align physicians’ goals with their own – it must be paired with financial alignment in order to be most effective. The authors advise policymakers to be mindful of the role physician employment plays in improved hospital performance and “continue to seek ways to streamline and simplify the legal and regulatory hurdles that sometimes serve as barriers to financially aligning hospitals and physicians.” Dobrzykowski and McFadden close their article by offering potential directions for future research. For instance, they suggest that researchers might investigate physicians’ views on employment status.

Read the full article in Decision Sciences.