10 Dynamics of the Physician-Hospital Relationship

A Primer for Hospital Leadership Teams

In the business of healthcare, the physician-hospital relationship is critically important. Not only does the status of this relationship impact the success of a medical center, but it also affects the overall health of a community as well. 

As with any healthy relationship, trust and cooperation are fundamental. If these elements are to be achieved between physicians and hospitals, the relationship must be built on a foundation of mutual understanding. The dynamics of the healthcare industry in general--and the physician-hospital relationship in particular—may mean mutual understanding is an elusive goal.

Understanding these 10 dynamics of the physician-hospital relationship will make healthcare stakeholders more aware of the potential obstacles that stand in the way.

The Dynamic of Significance

Physicians are the healthcare stars. Because they diagnose and treat patients, they drive the need for improved hospital facilities and healthcare technologies. Patients primarily select hospitals on the basis of physician recommendations. Moreover, hospital costs are controlled to a great extent by the power of the physician’s pen.    

Traditionally, hospital leadership is responsible for creating a workshop conducive to the physicians’ success in diagnosing and treating patients. Hospitals--especially community hospitals--fulfill an important void as a healthcare safety net for many of society’s poor and disadvantaged. The manner in which hospitals are operated has a direct correlation with patient morbidity and even mortality.

The relationship deteriorates when the parties begin to view one another as simply commodities. Physicians and hospitals each fulfill an important purpose and should be recognized for the significance of their responsibilities. 

The Dynamic of Trust

There is a growing predisposition of mutual mistrust among physicians and hospitals. Physicians may hear from colleagues, medical school faculty members, chief residents and residency program directors that hospital administrators aren’t to be trusted. Hospital administrators hear tales from mentors and colleagues about selfish and greedy physicians who aren’t to be trusted either. When stereotypes form the foundation of the physicians’ and hospital leaders’ perceptions, the challenge of forging healthy relationships can be daunting. 

The Dynamic of Leverage

Physicians and hospitals are cautious about placing all of their eggs into one basket.  Hospitals don’t like to be dependent upon one physician or a sole medical group. Physicians hesitate to affiliate with only one medical center. They each tend to fear that the other may gain and misuse positions of strength.    

This dynamic may lead to healthy competition. Hospitals cannot take their physician affiliates for granted and physicians cannot assume that they have the local market cornered in their specialty. However, this way of thinking may also lead to counter-productive behavior. 

For example, physicians may spread themselves too thin as they attempt to fulfill the obligations of two or more hospital medical staff memberships. On the other hand, hospitals may enter into proprietary relationships with other physicians in a negative reaction to the growing leverage of an established physician group. 

The Dynamic of Efficiency

Physicians place a high value on efficiency in their professional life. Unfortunately, the responsibility for adherence to numerous hospital regulations falls on their shoulders. Hospitals should minimize intrusions into the physician’s private practice through increased efficiencies and by sensitizing their workforce to the issue. If not, an increasing number of physicians will seek opportunities that do not require them to be integrated with the hospital. 

Hospitals also depend on physicians to be responsive to patient schedules. While physicians often encounter legitimate conflicts, some   are notorious for their disregard for hospital patient schedules.

Mutual respect is warranted for the time demands of physicians as well as the patient scheduling needs in the hospital setting. 

The Dynamic of Recruitment

Physician recruitment is often a double-edged sword. A perceived physician recruiting need by the community or hospital may be perceived as a threat by one or more existing physicians. Behind the scenes, the arrival of a new physician may garner a negative reaction among some longstanding M.D.s in the community. The drivers of this reaction may be fear of economic impact, intrusion upon professional turf or exposure of clinical weaknesses. In some situations, physician recruiting may become a “zero sum” exercise: Whatever is gained by bringing in the new recruit may be partially, if not entirely, offset by the reactions of the offended party. 

The Dynamic of Loyalty

Many hospitals have gone down the same path. They’ve recruited a physician, purchased the equipment he requested and established a new service line that he considered necessary, only to have that physician refer some patients to other medical centers, invest in a competing business enterprise or even leave the community. Needless to say, the loyalty to that physician decreases significantly.

Conversely, many physicians have consistently supported a medical center for years and admitted patients to that facility alone, only to wake up one day to find that the hospital has recruited a competing physician who will dilute their market share and reduce patient revenue. Again, the result is a significant decrease in loyalty to that hospital.

Hospitals and physicians must thoughtfully evaluate each decision and its potential impact on their relationship. One poor decision may remove any semblance of loyalty that existed. 

The Dynamic of Community Connectivity

The typical hospital is strongly connected to its community through hospital and foundation board members, volunteers and hospital representatives who serve in civic clubs and on nonprofit agency boards. This connectivity gives hospitals a steady stream of input and feedback, including valuable insight regarding specific physicians. Hospitals may hear about physicians’ clinical care, professional behavior, and even their private office operation.      

At the same time, physicians hear from their patients about a hospital’s overcrowded waiting rooms, the volumes of forms they must complete and under-staffed nursing units. Physicians’ direct, personal connection with individual patients is powerful. It provides unique insight into the hospital’s opportunities for improvement. 

Failure to appreciate this mutual connectivity on the part of either physicians or hospitals can lead to missed opportunities. Openness to constructive feedback on the part of both groups paves the way for excellence. 

The Dynamic of Referral Patterns

 Physicians increasingly refer to other physicians primarily and to hospitals secondarily. A physician will take into consideration the reputation of a hospital and may be impacted by some degree of loyalty when making a referral, but the basis of their decision is typically the doctor to whom they are referring.

This dynamic is observed most vividly within health systems. Large metropolitan hospitals often enter into relationships with outlying rural hospitals to increase referrals to their specialty physicians. This strategy proves effective when metro hospitals and their specialists understand the benefits and limitations of the affiliation. The affiliation itself will not produce a single additional patient referral. It will, however, produce an opportunity for them to understand and meet the needs of the outlying referring physicians. 

The Dynamic of Outpatient Clinical Services Revenue

The shift of healthcare from inpatient to outpatient settings, continued technological advancement and stagnating physician incomes create significant physician interest in developing their own outpatient clinical services. Hospitals that do not come to grips with this dynamic will inevitably discover that some of their physicians are planning a major competitive enterprise.

Physicians who take advantage of proprietary clinical service opportunities, without regard for its impact on their preferred hospital, will more than likely be disappointed by the long term ramifications of their business decision.

When physicians and hospitals seek opportunities to form strategic business alliances they may be better equipped to capitalize on the changes taking place in the healthcare industry. Capital may be preserved, diverse talents and expertise can be focused on a new clinical service and the key healthcare stakeholders can gather at the same table. 

The Dynamic of Communication

Creating effective communication channels between physicians and hospitals is a formidable undertaking. Formal channels, such as regular medical meetings of the medical staff, are not the best forum for effective communication. Physicians are often rushed, and the group is typically too large. Informal channels like hallway conversations, dialogue in the physicians’ lounge or lunch in the physicians’ dining room have their place, but they can be time consuming and unpredictable. Consequently, lacking an effective channel, interaction wanes and paths diverge. 

While communication is a two-way street, the brunt of the responsibility lies with hospital leadership to develop innovative and proactive means of listening to and communicating with their medical staff.

Recognizing the dynamics that rage between physicians and hospitals--and the impact they can have--will lead to greater understanding. Greater understanding will lead to healthier professional relationships. Communities will be better served and patients will receive better care as the outcome.

By Jesse O. Weatherly and Stephen C. Nyquist for HealthLeaders News - June 8, 2006