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The last chapter explored some general principles of health care organization, including levels of care, regionalization, physician and other practitioner roles, and patient flow through the system. This chapter looks more closely at actual structures of medical practice.

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The traditional dispersed model of the US medical practice has been referred to as a “cottage industry” of independent private physicians working as solo practitioners or in small groups. A number of alternative organizational forms have existed in the United States, ranging from community health centers to prepaid group practices. The traditional model is in competition with a system of larger practice organizations and networks structured along a more integrated model of health care delivery.

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Physicians and Hospitals

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Dr. Harvey Commoner finished his residency in general surgery in 1956. For the next 30 years, he and another surgeon practiced medicine together in a middle-class suburb near St. Peter's Hospital, a nonprofit church-affiliated institution. Dr. Commoner received most of his cases from general practitioners and internists on the St. Peter's medical staff. By 1965, the number of surgeons operating at St. Peter's had grown. Because Dr. Commoner was not getting enough cases, he and his partner joined the medical staff of Top Dollar Hospital, a for-profit facility 3 miles away, and University Hospital downtown. On an average morning, Dr. Commoner drove to all three hospitals to perform operations or to do postoperative rounds on his patients. The afternoon was spent seeing patients in his office. He was on call every other night and weekend.

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Dr. Commoner was active on the St. Peter's medical staff executive committee, where he frequently proposed that the hospital purchase new radiology and operating room equipment needed to keep up with advances in surgery. Because the hospital received hundreds of thousands of dollars each year for providing care to Dr. Commoner's patients, and because Dr. Commoner had the option of admitting his patients to Top Dollar or University, the St. Peter's administration usually purchased the items that Dr. Commoner recommended. The Top Dollar Hospital administrator did likewise.

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During the period when Dr. Commoner was practicing, most medical care was delivered by fee-for-service private physicians in solo or small group practices. Most hospitals were private nonprofit institutions, sometimes affiliated with a religious organization, occasionally with a medical school, often run by an independent board of trustees composed of prominent people in the community. Most physicians in traditional fee-for-service practice were not employees of any hospital, but joined one or several hospital medical staffs, thereby gaining the privilege of admitting patients to the hospital and at times acquiring the responsibility to assist the hospital through work on medical staff committees or by caring for emergency department patients who have no physician.

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For many years, the physicians were the dominant power in the hospital, because physicians admit the patients, and hospitals without patients have no income. Because ...

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