The Organization of the Hospital
A hospital is a complex institution in which patients are treated by members of the hospital’s medical staff, that includes, but is not limited to, physicians, advanced practice providers (such as physician assistants [PAs] and nurse practitioners), psychologists, and oral surgeons. Hospitals vary in size and complexity according to the needs and demographics of the communities they serve. There are about 5500 hospitals in the United States today, and this number has been dropping for the past decade due to consolidation of medical services into larger institutions.
Within the United States, there are three major types of hospitals: nonprofit, for-profit, and government-owned. The majority of hospitals in the United States are nonprofit organizations. They are licensed by their state and are deemed to provide essential services to their community. As such, they are effectively owned by the communities in which they are located. They do not pay any federal or state taxes, they can borrow money by issuing tax-exempt bonds, and they reinvest surplus revenues to improve their organization and services. They are led by boards of directors that are self-sustaining and most often comprise a group of business and civic leaders in their communities. For-profit hospitals, which represent roughly 15% of hospitals nationwide, are owned by shareholders who receive some of the profits in the form of dividends. They do pay taxes and borrow money at higher rates than not-for-profit organizations. Despite these major organizational and financial differences, both types of institutions look very similar to the average patient. US government-run hospitals include the Veteran’s Affairs, Military, and Indian Health Service systems; this type of hospital is also exempt from paying taxes.
| Hospital Type | Controlling Body | Taxes | Surplus Income |
|---|---|---|---|
| Nonprofit | Board of directors | Exempted | Reinvested in the organization |
| For-Profit | Shareholders | Taxed | Profits shareholders (dividends) |
| Government-Owned | Government | Exempted | Not applicable |
Teaching is an additional aspect that differentiates hospitals. Academic medical centers are institutions committed to training future healthcare providers and facilitating cutting-edge medical research. They are often large, comprehensive medical enterprises that are frequently associated with medical, PA, and nursing schools. Many community hospitals have relationships with educational programs as consistent with their missions and locations.
Medical Staff
The concept of an independent and autonomous hospital medical staff has evolved over time in the United States. Unlike systems in many other countries, until recently, US physicians have infrequently been employed by the hospital. It has been recognized by multiple professional and regulatory organizations, including the American College of Surgeons (ACS) and the Joint Commission, that a medical staff structure independent of the hospital’s administration is an important component in guaranteeing quality patient care.
The organized medical staff is responsible for creating criteria for who can practice in the hospital, what their scope of practice is, and supervising a system of due process for responding to situations where concerns about the professionalism or medical quality of medical staff members have been raised. The medical staff is often led by a medical staff president elected by their colleagues. There may also be a hospital medical director who has a dual reporting relationship to both the hospital administration and medical staff. Each of the recognized specialties in the hospital is lead by a department chair who may either be elected by medical staff members in that discipline or appointed by a senior executive according to the hospital’s structure.
Many of the departments or service lines in the hospital have a dual structure, with a service-line medical director working together with an administrative partner appointed by hospital administration. The medical staff leaders meet in a monthly medical executive committee (MEC), and the entire medical staff of the hospital generally meets quarterly. In addition, there are various medical staff committees to review matters of medical staff credentialing and quality that are approved by the MEC and ultimately the hospital medical staff as a whole.
Hospital Administration
The hospital’s executive management team generally consists of a chief executive officer (CEO), chief medical officer (CMO), chief financial officer (CFO), and a chief information officer (CIO). Thus the area in which they all work is often termed “the C suite.” The CEO establishes and oversees the implementation of strategic development initiatives that are aligned with the hospital’s mission, vision, and goals. The CMO acts as a liaison between the medical staff, governing bodies, and department chairs to coordinate medical services of various departments. The CFO manages the revenues and expenses. The CIO oversees the information and technology department, ensuring that the hospital’s and patients’ information is protected and that technology is utilized in accordance with the state regulations. The CEO additionally reports to the hospital’s board of directors. Fig. 1.1 describes a typical hospital organizational structure.
