Health Care Systems and Multicorporate Structures Coursework

Health care management is an area that covers different aspects of health care providers either directly or indirectly. “Hospital corporate restructuring is the segmentation of assets or functions of the hospital into separate corporations. While these functions are almost always legally separated from the hospital, but their impact on hospital policymaking may be far more direct”. (Jeffrey, et al 1988). We think that management system dealing with doctors, nursing staff, the main building of the hospital, pharmacy, laboratory and all of this makes a health care system but in fact, it is far more than this and it is far more extensive and complicated than what is normally thought and felt. “Healthcare organizations often employ multicorporate structures because of their many financial benefits”. (Jeffrey, et al 1988). The example we will be discussing here examines “the effects of corporate restructuring by community hospitals on the structure, composition, and activity of hospital governing boards An effective Quality-Utilization Management Program requires a contemporary and clinically relevant information system. Involvement of the medical staff and support of hospital personnel is critical to implement such a program. Equally important is the commitment of government and community representatives to address hospital quality and utilization issues in the context of the full range of community services” (Jeffrey, et al, 1988).

There is been limited work done on this concept of corporate restructuring and health care system through hospital policymaking.” Based on a review of the literature, we identified two basic board types: philanthropic and corporate. “The philanthropic model is based on descriptions of boards of not-for-profit organizations, while the corporate model is derived from descriptions of boards of directors of non-healthcare, private sector corporations” (Johnson, 1986). There are a number of positive aspects of multicorporate structure which are as follows. “It tends to distinguish more sharply between policymaking and operations of the organization (Mace, 1976; Vance, 1968). “It is more likely to see its own role as that of formulating institutional policy and strategic decision making, with a delegation of responsibility and authority to the CEO for day-to-day operations. This model works through a strategy which is aimed to emphasize their role also in establishing overall policy direction along with preserving the assets of the organization and fulfilling fiduciary responsibilities.” (Prybil and Starkweather, 1976; Kaufman, 1979; Ritvo, 1980). A small structure or as every hospital has a small human resources department in any hospital actually lemmatizes the utilities of a system but having a corporate structure increases the usage of a system and more way to increasing income and stabilizing the internal and external consistency. “In the current health care climate, for example, they are more likely to be concerned with the hospital’s competitive position; proposals for diversification, mergers, and joint ventures; and strategic planning. Several factors will drive the restructured hospital to adopt a more corporate-style board. First, corporate restructuring often segments or unbundled organizational activities other than inpatient care into separate corporations” (Jeffrey, et al 1988).

“This permits the hospital to adopt a board structure more tailored to the specific needs and activities of the hospital itself. This situation lends itself to a less diffuse; more focused corporate-style board, in which the interests, talents, and disciplines of board members can be better matched to the specific requirements of the hospital. Apart from this the establishment of multiple boards of directors under corporate restructuring implies that some governance functions originally performed by the hospital board will pass to other boards. Specifically, many of the hospital fund-raising and community relations activities will be transferred to the parent holding company or foundation boards. This transfer of responsibilities again frees the hospital board to attend to the internal activities involved in running the hospital, leaving the environmental linkage functions to the parent board” (Pfeffer, 1973). Establishing a corporate model in a health care system is like assigning duties to the specific concerned people where everyone is responsible for his/her part of work in a chain and the chain is moving towards improving the system which is a very healthy concept. “Those functions remaining with the hospital board would most likely include professional relationships, quality assurance, joint conferencing, hospital finance, and hospital planning” (Hoch, 1984). This is going to be a body working with the already existing body and is not going to change everything all the way from the beginning. It will just modify the system and will not transform it but the changes in the out seen are going to be drastic. “These responsibilities are likely to require corporate attributes such as increased management and medical staff participation and strategic planning. Perhaps most fundamentally, corporate restructuring represents in practice the notion of health care delivery as a business. It is reasonable to expect, therefore, that the policymaking body of the hospital will assume a configuration consistent with this orientation by adopting the corporate board model”. (Jeffrey, et al 1988). Aga Khan University and Hospital is an example that has adopted the corporate structure and has shown a profound change in the yearly profit, patient satisfaction, the quality of care provision, and an overall reputation in the area. It recently got affiliated by JCIA due to its outstanding performance in the field of best quality health care provision.

There used to be a trend that most of the health care systems were working on not for profit basis and a number of institutions used to work towards charity. Then there was a time when the management changed to privatization of nonprofit institutions. “The extension of the voluntary hospital into profit-making businesses and the penetration of the corporation into the hospital signal the breakdown of the traditional boundaries of voluntarism” (Starr, 1982, p. 438). Now due to a number of reasons the trend changed again and now the recent picture is a different one. Now many of the profit and nonprofit institutions have entered into more “corporate-like entities, typically including a combination of both not-for-profit and for-profit organizational units”. The evidence of such breakdown is most likely to be felt in the governance area where voluntarism has historically been expressed (Wisler and Kaufman, 1986). Community Health Systems (CHS) is an example of a multicorporate organization. CHS owns, operates, or leases acute care hospitals in 29 states, in addition to primary care facilities. (Community Health Systems Professional Services Corporation, 2007). this department everywhere has a dual nature of work. At some activities, it’s a profit-making department but at others, it is more involved in charity work and is a totally not for-profit institution.

References

1. Hoch, L. J. Corporate reorganization: Non-profit tax-exempt hospitals. Topics in Health Care Financing 11(1): 1-5, 1984.
2. Johnson, T. Improving Board Effectiveness in Hospitals: Can the Corporate Model Help? Working Paper. University of Pennsylvania, Philadelphia, 1986.
3. Mace, M. Directors: Myth and Reality. Boston: Harvard University Press, 1971.
4. Prybil, L., and D. Starkweather. Current perspectives on hospital governance. Hospitaland Health Services Administration 21:67-75, 1976
5. Pfeffer, J. Size composition and function of hospital boards of directors: A study of organizational environment linkage. Administrative Science Quarterly 18(3):349-64, 1973.
6. Starr, P. The Social Transformation ofAmerican Medicine, New York: Basic Books,1982.
7. Wisler, T., and K. Kaufman. Not-for-profit Governance in a Competitive Marketplace- Rules of a Different Game. Congress of the American College of Healthcare Executives, Chicago, 1986.