The changing power equation in hospitals

Abstract

This research traces the origins, development, and reasons for change in the power equation in the U.S. hospitals between physicians, administrators and accountants. The paper contains three major sections: a review of the literature concerning authority, power, influence, and institutional theory; a review of the development of the power of professions, especially physicians, accounting and healthcare administrators, and the power equilibrium of a hospital; and, a discussion of the social policy implications of the power struggle. The basis for physicians' power derives from their legal ability to act on which others are dependent, such as choosing which hospital to admit patients, order tests and procedures for their patients. The Federal Government's prospective payment system and the hospitals' related case-mix accounting systems appear to influence the power structure in hospitals by redistributing that power. The basis of the accountants' power base is control of financial information. Accountants have a definite potential for influencing which departments receive financial resources and for what purpose. This moves hospital accountants into the power equation. The basis of the hospital administrators' power is their formal authority in the organization. Regardless of what actions federal government agencies, hospital accountants, or hospital administrators take, physicians are expected to remain the dominant factor in the power equation. Without major environmental changes to gain control of physician services, only insignificant results in cost containment will occur.