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Giving Doctors More Bargaining Power May Harm Hospitals

Raising physician autonomy may come at the expense of hospital leaders

Providing doctors with increased bargaining power may hurt hospitals in the long run, according to research published in Organization Science.

Jill A. Brown of Bentley University in Waltham, Massachusetts, and her team observed and interviewed staff members of an unnamed nonprofit hospital for 15 months and combined their results with previously archived material.

As part of the transition, Fierce Healthcare notes, the hospital shifted its governing structure, increasing physician autonomy in managing activities and costs across hospital units. This achieved the goal of physician retention amid heavy competition but significantly increased physicians' bargaining power at the expense of the hospital's, dramatically increasing replacement costs for physicians as they became part-owners of shared facilities. As the hospital's internal bargaining power eroded, the loss eventually canceled out the external competitive advantage the new governance structure had given it, according to Brown and her team.

These concerns are particularly relevant as primary care physicians increasingly flock to the hospital sector and health care leaders seek to give hospital doctors a bigger seat at the C-suite table.

"Our results show that human capital bargaining power is a 'double-edged sword,' shifting the governance structure to benefit those with power by providing additional rents, but creating challenges for the ongoing management and retention of such valuable human capital," the authors wrote. "Our findings have implications for the long-term survival of talent-intensive organizations where human capital bargaining power is strong."

Source: Fierce Healthcare, October 2, 2015.

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