The impact of physician‐hospital integration on hospital supply management

Abstract

This study examines how organizational alignment between professionals—who act as surrogate buyers‐‐ and the organizations in which they work, influence the supply management efficiency of the organization. Based on a cross‐sectional sample of hospital data, we estimate random effects regression models to investigate the association between physician‐hospital integration mechanisms and hospital supply efficiency. The results suggest that either professional hierarchy or bureaucratic pressures can improve supply management efficiency. In a sector of the economy characterized by escalating costs and uncertainty, the findings provide potential guidance for professional relationship strategy design to improve sector performance.

Patient care effectiveness and financial outcomes of hospital physician contracting emphasis

“…Recent research has predominantly focused on either the financial consequences of hospital-physician integration (e.g., Abdulsalam et al, 2018;Nyaga et al, 2015) or the effects of such integration on patient care (e.g., Dobrzykowski & Tarafdar, 2015). In contrast, we evaluate both financial and patient implications in a common framework and show that, even though an increased emphasis on contract physicians improves financial performance, this benefit comes at the expense of lower patient care.…”

“…This can relax the need for directly employing a large number of physicians, who typically command high salaries, and help reduce the overall payroll costs (Abdulsalam et al, 2018). This can relax the need for directly employing a large number of physicians, who typically command high salaries, and help reduce the overall payroll costs (Abdulsalam et al, 2018).…”

“…Contracting with physicians to deliver patient care is one of the dominant forms of hospital-physician arrangements in the United States (Abdulsalam, Gopalakrishnan, Maltz, & Schneller, 2018). Indeed, according to the American Medical Association in 2016 only 7.4% of physicians were directly employed by hospitals, 25.4% worked for a practice with at least some hospital ownership (Kane, 2017), and contracting comprised a significant portion of the remaining percentage (Bazzoli, Dynan, Burns, & Yap, 2004).…”

“…In part, the complexity arises due to the difficulty of integrating contracted physicians rather than employed physicians into a hospital's processes (Chukmaitov, Harless, Bazzoli, Carretta, & Siangphoe, 2015). While some studies have shown that physician contracting leads to higher hospital expenses (Mark, Evans, Schur, & Guterman, 1998) and payroll costs (Abdulsalam et al, 2018), other work has found that contracting has no significant effect on hospital costs (Bazzoli, Dynan, Burns, & Lindrooth, 2000) and can improve supply chain efficiencies in some cases (Nyaga, Young, & Zepeda, 2015). While some studies have shown that physician contracting leads to higher hospital expenses (Mark, Evans, Schur, & Guterman, 1998) and payroll costs (Abdulsalam et al, 2018), other work has found that contracting has no significant effect on hospital costs (Bazzoli, Dynan, Burns, & Lindrooth, 2000) and can improve supply chain efficiencies in some cases (Nyaga, Young, & Zepeda, 2015).…”

“…We utilize the average patient length of stay as our main measure of patient care effectiveness and conduct post hoc analysis with additional measures of care quality, including patient experiential quality, conformance quality, readmissions, and mortality. The PSO literature complements the insights available from TCE with arguments relevant for professional services environments such as hospitals where physicians, as expert professionals, maintain high contact with patients and manage service process variations arising from unpredictable patient needs (e.g., Abdulsalam et al, 2018;Dobrzykowski et al, 2016). TCE outlines the financial benefits of reliance on a competitive market of outside agents, as well as alerts to the costs and risks associated with contracting (Grover & Malhotra, 2003).…”