Group Title: anomalies of hospital organization
Title: The Anomalies of hospital organization
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Title: The Anomalies of hospital organization the implications for management
Physical Description: ii, 277 leaves. : ; 28 cm.
Language: English
Creator: Bauerschmidt, Alan Donald, 1927-
Publication Date: 1968
Copyright Date: 1968
Subject: Hospitals -- Administration   ( lcsh )
Management and Business Law thesis Ph. D   ( lcsh )
Dissertations, Academic -- Management and Business Law -- UF   ( lcsh )
Genre: bibliography   ( marcgt )
non-fiction   ( marcgt )
Thesis: Thesis--University of Florida, 1968.
Bibliography: Bibliography: leaves 264-275.
Additional Physical Form: Also available on World Wide Web
General Note: Manuscript copy.
General Note: Vita.
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Bibliographic ID: UF00097786
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: alephbibnum - 000559129
oclc - 13439772
notis - ACY4575


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Chapter Page

1. INTRODUCTION........................................... I

II. ORGANIZATIONAL OBJECTIVES.. ........................... 33

Ill. THE LINE ORGANIZATION................................. 58

IV. THE STAFF ORGANIZATION................................. 103


VI. AN ANOMALY: TWO CHAINS OF COMMAND....................... 142

BUREAUCRATIC IN STRUCTURE.......................... 158

VIII. THE PROTOTYPE ORGANIZATION.......................... .... 177

IX. TOWARD EUPSYCHIAN MANAGEMENT.......................... 229

APPENDIX....................................................... 247

BIBLIOGRAPHY................................................... 264

BIOGRAPHICAL SKETCH............................................ 276



In spite of the variety of concepts which can be labeled as

organization theory each can be observed to have its basis in the

notion that a universality of organization structure exists and can

be described. This notion can be as fundamental, and as ancient, as

the discussions regarding the basic order of the universe and its

smallest parts. Or, it can be as sophisticated, and as current, as

the levels of order expressed in the concepts of general systems

theory. Cosmos is accepted over chaos through rational perception

whether first causes are attributed to a toss of the dice or a divine


If the formal organization is taken out of the basic order of

the universe and examined in its separate characteristics, as is more

generally attempted by the theorist, the same universal form of

structure is commented upon. However, this common form of structure

is variously described as to its source. Some authorities mark the

pervasiveness of the universal structure as an attribute of its prob-

lem-solving and coordinative ability.2 Other authorities, of which L /

Herzberg and Etzioni are representative, see the existence of

Kenneth Boulding, "General Systems Theory--The Skeleton of
Science," Management Science, II (April, 1956), 197.
2James D. Mooney, in Principles of Organization (Revised Edition;
New York: Harper and Brothers, Publishers, 1947), p. 1, provides that:

universality of organizational structure in the predominance of a

particular organization in the social scheme.

Much of the controversy among authorities regarding the univers-

ality of organization structure hinges upon the place accorded to

"principles of organization" in the various concepts of organization

theory. There appears to be two distinct levels of analysis in this

regard: that which directs itself to observations about organization

and are descriptive of universal features; and, that which seeks to

prescribe for organization structure based upon the logic of

"Organization is the form of every human association for the attain-
ment of a common pupose," and that certain features are essential to all
forms of organization. Chester Barnard, in The Functions of the Execu-
tive (Cambridge, Mass.: Harvard University Press, 1938), pp. 94-95;
allows that both simple and complex forms of organization have their
similarity as impersonal systems of coordinated human effort. Rocco
Carzo, Jr. and John N. Yanouzas employ the systems concepts in Formal
Organization: A Systems Approach (Homewood, Ill.: Richard D. Irwin, Inc.,
1967), p. 534, to derive the concept of organization as a problem-solv-
ing routine based on a simple and natural human response to complex

Frederick Herzberg maintains that the business organization has
provided its coloration to all other institutions that serve Western
society. See his Work and the Nature of Man (Cleveland, Ohio: The
World Publishing Co., 1966), p. 1. Amitai Etzioni, in "Authority
Structure and Organizational Effectiveness," Administrative Sciences
Quarterly, IV (June, 1959), 51, remarks that the concept of universality
can be traced to the fact that organization theory was originally dev-
eloped on the basis of observations and analysis of governmental and
private business bureaucracies. Contrasting the approaches of the social
versus the administrative scientist, Amitai Etzioni, in Modern Organiz-
ations (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1964), p. 21, pro-
vides that the scope of the former is much broader, and through struc-
tural analysis reveals much of the discrepancy occurring through ad-
herence to the earlier administrative model.

universals. However considered, the concept of principles pervades

the literature addressing itself to the study of organizations, with

the general context directed toward those facets of organization which

are universal.5 Even those investigators who mount the most vigorous

attack upon the pervasiveness of these universalities acknowledge

their presence in the attempt.

Many of the criticisms taken in regard to universality of organi-

zation structure are not directed toward the underlying principles, but,

rather, are directed at what must be considered as unique applications

of structure and process in specific types of organization. These

4Representative of the descriptive approach are the comments of
William G. Scott, in Organization Theory: A Behavioral Analysis for
Management (Homewood, Ill.: Richard D. Irwin, Co., 1967), p. 149; and,
E. Wight Bakke, "Concept of the Social Organization," Modern Organization
Theory, ed., Mason Haire (New York: John Wiley and Sons, Inc., 1959),
pp. 34-35. Amitai Etzioni, in A Comparative Analysis of Complex Organi-
zations (New York: The Free Press, 1961), p. xiii, takes the second
approach to task without identifying the culprits. Mooney, p. 1, pro-
vides the classical example of the essentiality of certain organizational
features which justify the claim of principles.
peter M. Blau and W. Richard Scott, in Formal Organizations (San
Francisco: Chandler Publishing Co., 1962), pp. 8-9, refer to: ". .the
principles that govern organizational life." John M. Pfiffner and Frank
P. Sherwood, in Administrative Organization (Englewood Cliffs: N.J.:
Prentice-Hall, Inc., 1960), p. 30, note that: ". .the existence of a
common core of practice and pattern in organizations seems to have
achieved reasonably substantial consensus."
Chris Argyris refers to the basic "genes" of organizational
structure in Integrating the Individual and the Organization (New York:
John Wiley and Sons, Inc., 1964), pp. 14-15.

approaches have led to the concept of comparative analysis which will

reveal the fundamental nature of organizations. These approaches to

organization theory will receive major attention in this paper in view

of their centrality to the question of anomalous structure.

The concept of a universality of organization structure underlies

the practice of management. This structure provides the basis for the

application of managerial techniques associated with the coordinative

process of management. Mooney points out, with certain mental agility,

the concept that administration, or management, presupposes organization--

yet management precedes organization for the coordinative process is
subordinate to management. It is on this basis that Mooney's principles

of organization have been misconstrued to imply that there exists one

best prescription for organization, rather than one best description.10

Additional insight into the source of the management function in

the universality of organization structure is provided by John F. Mee,

Daniel Katz and Robert L. Kahn, remark in The Social Psychology of
Organizations (New York: John Wiley and Sons, Inc., 1966), p. 110, that:
"Though there are undoubtedly unique aspects in any social situation,
there are also common patterns, and the deeper we go, the greater the
genotypic similarities become." Etzioni, Comparative Analysis, p. xiii,
provides the proposition that comparative analysis will reveal the uni-
versal propositions of organization theory if such exist.

8illiam G. Scott, "Organization Theory: An Overview and an Appraisal,"
Journal of the Academy of Management, IV (April, 1961), 8.

Mooney, pp. 3-4.

10James G. March and Herbert A.Simon, Orqanizations (New York: John
Wiley and Sons, Inc., 1958), p. 30.


who remarks on the historic appearance of management thought indepen-

dently in various countries of Western society which are presumed to

share in the characteristic structure.11 March and Simon note that the

task F. W. Taylor set himself in investigating the effective use of

human beings in industrial organizations--the management process--quickly

developed into the general task of organization theory: the analysis of

the interaction between humans and the social and task environments

created by organizations.2 Katz and Kahn comment that much of existing

organization theorizing has been directed toward the development of

managerial philosophy and techniques to the detriment of acceptance of

the nuances of description and recognition of the openness of the organi-

zational system.1 In each of these instances it is apparent that a

vital link exists between the practice of management and the structure

of organizations.

If a universality of organizational structure exists and management

is the process of coordination within an organization then a process of

management can also be described which is universal to all organizations.

Terry has noted the consequence of such observations as follows:

Since the management process is universal, what is meaningful
about one manager's work applies likewise to that of all mana-
gers. The management process represents the common fabric of

lJohn F. Mee, Management Thought in a Dynamic Economy (New York:
New York University Press, 1963), p. xix.

12March and Simon, p. 12.

1Katz and Kahn, pp. 26-27.

similarity among managers and serves to expedite the study of
management. It is universally found wherever men work together
to achieve common objectives. . There is ample evidence to
show that these managerial functions can be applied effectively
by the same managers to different enterprises.

While Koontz and O'Donnell remark:

Managers perform the same functions regardless of their place
in the organization structure or the type of enterprise in which
they are engaged. .it means that anything significant that is
said about the functions of one manager applies to all managers
S. .it is now possible to develop a theory of management appli-
cable to all executives in all occupations.15

It is, however, important to recognize that these authorities do not

imply that the methods of management will be alike in all organizations.

The identical nature of the process of management is limited to those

aspects of organizational structure which are universal and in accord

with the "principles" of organization. The process of management must

then be such functions as are organic to all organizational processes

and their related structures. And, with these processes of management

are associated various managerial techniques which provide the mechanism

for carrying out these organic functions.

If hospital organizations depart from the universal structure of

organization to any significant degree then the application of standard

1George R. Terry, Principles of Management (5th ed. rev.; Homewood,
Ill.: Richard D. Irwin, Inc., 1968).

15Harold Koontz and Cyril O'Donnell, Principles of Management (3rd
Edition; New York: McGraw-Hill Book Co., 1964), p. 45.


management techniques within the hospital structure would be inappropri-

ate. If these management techniques developed within the fields of

business and public administration are inappropriate, then a new source

of management technology for hospital institutions must be developed.

It therefore rests with a discussion of the universality of organizational

structure to determine whether the process of management and its associated

technology are justifiably transferable among organizations.

Two authorities who are perhaps representative of the critics

applying themselves to the concept of lack of universality among organi-

zational structures at this general level of consideration are Amitai

Etzioni and the co-authors Daniel Katz and Robert L. Kahn.7 Katz and

Kahn maintain that a single broad dichotomy can be made between organi-

zational structures of an economic and non-economic variety based upon

whether the transformation process accomplished by the organization is

related to the processing of objects or the molding of people. To

these authors the difference is so basic in its structural aspects that

transference of managerial techniques between the two must be actively

resisted--with particular mention made to the transference of technique

between the industrial and hospital organizations.9 Etzioni, from

another point of view, provides for three basic structures of organization

which have "natural" barriers to the transference of both managers and

17Etzioni, Comparative Analysis. Katz and Kahn.

8Katz and Kahn, pp. 115-116.

19 bid.

their techniques. These separate organizational forms are identified

by the norm of compliance exacted in the managerial process and are
categorized as coercive, remunerative, and normative. Under this

analysis hospitals are classified as normative compliance organizations

while business organizations are characterized as exacting remunerative

compliance.1 Even those theoretical studies which do not provide for

rigid structural separation and encompass a more universal concept in-

clude sufficient doubt to suggest that transference of managerial tech-

niques may be precluded.22

At a more pragmatic level it could be maintained that the appear-

ance of a separate field of management study such as hospital admini-

stration would indicate that an anomalous structure of organization

exists in hospitals. This phenomenon should suggest that the techniques

associated with the management process as universally defined have failed
in adaptation to some undefined hospital administrative process.2 If

the underlying structural anomalies can be identified as existing, in

2Etzioni, Comparative Analysis, p. 274.

21 bid., p. 42.

22Samuel W. Bloom maintains, in The Doctor and His Patient (New
York: The Free Press, 1963), p. 160, that the analogy between hospitals,
in their present bureaucratic form, and the remainder of our social insti-
tutions, can be carried just so far before the path of hospital analysis
takes its own turn.
23Paul J. Gordon, in "The Top Management Triangle in Voluntary Hospi-
tals (I)," Academy of Management Journal, IV (December, 1961), 205.
remarks on the complaints of hospital administrators that management
principles do not apply in their specialized field.

fact, then perhaps those managerial techniques which are unrelated to

such anomalies may yet be salvaged for transfer to the hospital organi-
zation.24 The significance of such an attempt lies well beyond the

limited area of hospital administration. Litchfield has commented that

in spite of abundant evidence supporting the conviction that there is

much in common in administration we appear to witness the lack of generic

administrative process through the appearance of a series of isolated
types of administration.2

Quite specifically, it would appear to be necessary to determine

whether a complete dichotomy of structural forms exists, or whether the

departure of the hospital structure from the universal structure is

along a discernible continuum which allows for appropriate modification

of managerial methods. Broad dichotomies of structure, because of their

link to the management process, create extensive gaps between what might

appear superficially to be related disciplines of training and research.

Dichotomies of training and research inhibit the transfer of techniques

between the unrelated management processes even if "cut-and-try" methods

might prove successful. Separate disciplines of training and research

This possibility goes beyond the recommendation of Wallace S. Sayre,
in "Principles of Administration--I," Hospitals, XXX (January 16, 1956),
34, to cut and try the principles for fit in the hospital situation.

25Edward H. Litchfield, in "Notes on a General Theory of Admini-
stration," Administrative Sciences Quarterly, I (June, 1956), 7-8, re-
marks specifically on the appearance of such fields of study as hospital
administration, public administration, military administration, hotel
administration, and school administration.


create unique forms of terminology, and the foundations which prepare

students for participation in special programs of study tend to be

dichotomized in turn. If the process of management is unique to a busi-

ness form of organization then it would be senseless to require a prospec-

tive graduate student in hospital or educational administration to master

the essentials of an undergraduate program in business administration or

management. And, if the structural mechanisms of the separate forms are

such as to divide the management process into different forms the develop-

ment of techniques associated with the management of business organi-

zations should not be offered as a remedy for the many problems which

face our hospital institutions today. In turn, the business management

student should not expect to learn much of value through an understand-

ing of the management process in hospital organizations.

It would appear that the separate possibilities of dichotomy versus

continuum form two separate camps that defy simple resolution. If

organization theory is to be meaningful it must attempt to explain how

organizations seek to meet their goals by integrating personal skills

and productive resources. Organization theory must contain more than
the necessary abstraction of-a general model claimed by Etzioni.2 This

content must be such that it cuts across the ordinary distinctions between

the social science disciplines.28

2John G. Hutchinson, Organizations: Theory and Classical Concepts
(New York: Holt, Rinehart and Winston, 1967), p. 156.

27Amitai Etzioni, Modern Organizations, p. 18.

28Talcott Parsons, "Suggestions for a Sociological Approach to the
Theory of Organizations--I," Administrative Sciences Quarterly, I (Sept-
ember, 1956), 64.

As Parsons has stated:

There is a tendency in our society to consider different types
of organizations as belonging to the fields allocated to dif-
ferent academic disciplines. . The tendency to divide the
field obscures both the importance of the common elements and
the systematic basis of the variations from one type to another.

Wilson observes that: "Hospitals are among the most complex organi-

zations in modern society, characterized by extremely fine division of

labor and an exquisite repertory of technical skills."30 Recognizing

this observation the search should be continued along the lines suggested

by Starkweather for the basis of an organization theory which encompasses

the special features of hospitals.31

Perhaps the most basic division which is noted between hospital

organizations and the normative organizations within which managerial

techniques are highly developed is the non-profit nature of the former.

This basis for dichotomizing organization structures is often alluded to

in the more popularized writings and is offered in explanation of some

particular failing of one form of organization or another. Even in the

more sophisticated literature there is some structuring of organizational

types which introduce the suggestion of an economic motive providing the

29Talcott Parsons, "Suggestions for a Sociological Approach to the
Theory of Organizations--II," Administrative Sciences Quarterly, I (De-
cember, 1956), 238.

3Robert N. Wilson, "The Social Structure of a General Hospital,"
Annals of the American Academy of Political and Social Sciences, No. 346
(March, 1963), p. 67.

31David B. Starkweather, "The Classicists Revisited," Hospital Ad-
ministration, XII (Summer, 1967), 69.

basis for the managerial process.3 This issue will not be pursued at

this point for it will be demonstrated that the question of the profit

nature of a particular organization is subsumed under the topic of

organizational objectives which is treated more fully in the following

chapter. For immediate purposes it would be sufficient to note that the

basic objective premise upon which managerial theory rests is the pro-

vision of service to that society of which the organization is a part.

In this respect the hospital and the business organization are basically

in accord.

It will be suggested that a significant departure between the fields

of business and public administration and that of hospital administration

exists in the degree to which the participants in the two similar struc-

tures identify with professional versus organizational norms and values.3

It will therefore be argued that hospital organizations differ from the

universal organization structure to the relative degree in which each

employs professionals in various organizational roles. It will further

3As mentioned before, Etzioni, in Comparative Analysis, p. xvi,
identifies the bases of compliance in the control sources identified as
coercion, economic assets, and normative values, resulting in the sepa-
rate organizational forms of coercive, utilitarian, and normative com-
pliance. Parsons, in "Suggestions--II," pp. 228-230; provides four
organizational classifications of which two economic and integrative
organizations reflect a separating out of the hospital organization from
the structure provided for economic organizations.

3Basil S. Georgopoulos, in "The Hospital System and Nursing: Some
Basic Problems and Issues," Nursinq Forum, V, No. 3 (1966), p. 14, re-
marks on this phenomenon in the hospital system.

4Blau and Scott, pp. 206-214, note the remarkable separation be-
tween "bureaucratic" and "professional" organizations within a similar

be maintained that in this respect hospital organizations can be con-

sidered as a prototype lying at the extreme of a continuum along which

other organizations are proceeding.35

The position will be taken that the professional participation in

hospital organizations includes the large number of members who are

emerging as professionals. Georgopoulos and Mann, indicate that those

on the road to professionalization include the nurses, the administrator,

the medical librarians, the medical technologists, the dietitians, and
others in paramedical positions. Etzioni would allow that these cate-

gories should only be classified as semi-professionals because they do

appear as salaried members of organizations and accede to the authority

structure of the organization.3

For purposes of discussion the criterion established by Vollmer and

Mills can be considered to apply; that is: "We suggest, therefore, that

the concept of 'profession' be applied only to an abstract model of

occupational organization and that the concept of 'professionalization'

context but directed toward the dissipation of the managerial functions
among various organizational members.

35Paul J. Gordon, in "The Top Management Triangle in Voluntary Hospi-
tals (II)," Academy of Management Journal, V (April, 1962), 66; and,
Gordon, "Top Management Triangle (I),"; p. 209, cites the hospital organi-
zation as a prototype but on a basis concerned with the multiple form of
contractual relationships existing between the patient, physician, and

3Basil S. Georgopoulos and Floyd C. Mann, "The Hospital as an
Organization," Hospital Administration, VII (Fall, 1962), 58.

37Etzioni, Modern Organizations, pp. 77-78.

be used to refer to the dynamic process whereby many occupations can be

observed to change certain crucial characteristics in the direction of

a 'profession,' even though some of these may not move very far in this
direction." The abstract model of a "profession" noted by Vollmer and

Mills is provided by Cogan, as follows:

A profession is a vocation whose practice is founded upon an
understanding of the theoretical structure of some department
of learning or science, and upon the abilities accompanying
such understanding. This understanding and these abilities are
applied to the vital practical affairs of man. The practices
of the profession are modified by knowledge ofa generalized
nature and by the accumulated wisdom and experience of mankind,
which serve to correct the errors of specialism. The profession
serving the vital needs of man, considers its first ethical
imperative to be altruistic service to the client.39

Other authorities included by Vollmer and Mills in their work provide

similar definitions to the above, but two should be mentioned who include

additional insight into the concept of profession. A. M. Carr-Saunders


A profession may perhaps be defined as an occupation based upon
specialized intellectual study and training, the purpose of which
is to supply skilled service or advice to others for a definite
fee or salary. I say fee or salary. It is sometimes held that
the typical professions, or even that the only true professions,
are those in which the practitioners are free lance workers and
therefore remunerated by fee. .remuneration is only of the

38Howard M. Vollmer and Donald L. Mills (eds.), Professionalization
(Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1966), pp. vii-vii.

39Morris L. Cogan, "Toward a Definition of Profession," Harvard Edu-
cational Review, XXIII (Winter, 1953), 49; cited by Vollmer and Mills,
p. vii.

essence of the matter insofar as it may be direct and definite.4

Greenwood considers the attributes of a profession to include: (1) syste-

matic theory, (2) authority, (3) community sanctions, (4) ethical codes,
and (5) a culture.4

One of the largest occupational categories employed in the typical

general hospital is that of the professional, or registered, nurse.

Along with her "practical" counterpart, nurses make up the single largest
occupational component of the hospital structure.42 This is by no means

the extent of professional participation in general hospitals but the

.nurse is most typical in regard to the source of her professional identi-

A. M. Carr- Saunders, "Professions: Their Organization and Place
in Society," Professionalization, eds. Howard M. Vollmer and Donald L.
Mills (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1966), p. 4.

4Ernest Greenwood, "Attributes of a Profession," Professionaliz-
ation, eds. Howard M. Vollmer and Donald L. Mills (Englewood Cliffs, N.J.:
Prentice-Hall, Inc., 1966), p. 10.
4American Nurses' Association, Facts about Nursing (New York: Ameri-
can Nurses' Association, 1967), p. 19; and, American Hospital Association,
"Hospital Statistics," Hospitals: Guide Issue, ILl, 2 (August, 1, 1967),542.

4American Nurses' Association, p. 19, includes 23.6 per cent of the
staff of American hospitals in the arbitrary category of professionals when
compared to the overall staffing count compiled by the American Hospital
Association, and reported in "Hospital Statistics," p. 452. Seventeen per
cent of the total staff of American hospitals are registered nurses, as
indicated by the same data; the American Nurses' Association does not con-
sider the practical nurse in the professional category, but they make up
approximately 7 per cent of the total hospital staff. The remainder of
the professional category included by the American Nurses' Association are
such occupations as medical technologist, dietitian, social worker, and
radiologic technologist. This method of classification is comparable to
that mentioned by Georgopoulos and Mann, p. 58.

Wessen notes that:

The ideology of the nurses. .is an outgrowth of the history
of their profession. The very basis for the professionalization
of nursing was rooted in the necessity for improving the quality
of personnel who served hospital patients. In order to improve
personnel, it was necessary to implant in them ideals of service
of a very exalted sort; the profession of nursing thus became,4 n
the eyes of women like Florence Nightingale, a sacred calling.

While these factors may have played a large part in the degree of

professionalization which has taken place among the various categories of

occupations contained in the hospital structure, undoubtedly the close

proximity of that epitome of professionalization, the physician, can

also be counted among first causes. In most respects it can be recog-

nized that the abstract model of the professional is most closely re-

sembled by the concept of the physician in our society. The model of the

physician is close at hand in the hospital setting and the values and

attitudes of that profession are readily transferable to other partici-

pants in the health care system.

Otheremerging professions may not have as ready a model at hand to

guide their striving for recognition as professionals; however, it cannot

be denied that a tendency toward such identification is sought by many
diverse occupational groupings. There are many theories advanced as to

the reasons for this phenomenon beyond the simple motive of prestige.

4Albert F. Wessen, "Hospital Ideology and Communication between Ward
Personnel," Patients, Physicians and Illness, ed. E. Gartly Jaco (New
York: The Free Press, 1958), p. 463.

4Vollmer and Mills, p. 2.

Blumer includes the striving for prestige as but one explanation among


Professionalization represents an indigenous effort to introduce
order into areas of vocational life wnich are prey to the free-
playing and disorganizing tendencies of a vast, mobile, and dif-
ferentiated society undergoing continuous change. Professional-
ization seeks to clothe a given area with standards of excellence,
to establish rules of conduct, to develop a sense of responsibil-
ity, to set criteria for recruitment and training, to ensure a
measure of protection for members, to establish collective control
over the area, and to elevate it to a position of dignity and
social standing in the society. . The pursuit of such complex
goals is one of the most notable trends in the shaping of modern
life; the movement toward professionalization is expanding in
scope and becoming more sophisticated in character.46

Goode comments that the degree of industrialization of a society is a

determining factor in the rate at which professionalism is advanced.47

Industrial societies are increasingly dependent upon professional skills,

and the United States is probably typical in that there has been little

change in the ratio of traditional professions to total population, but

a many fold increase in total numbers of professionals to population has

occurred over a brief period of time. These newer professions as well

as those of a more traditional standing are increasingly finding their

4Herbert Blumer, "Preface," Professionalization, eds. Howard M
Vollmer and Donald L. Mills (Englewood Cliffs, N.J.: Prentice-Hall, Inc.,
1966), p. xi.
4William J. Goode, "Community Within a Community: The Professions,"
American Sociological Review, XXII (April, 1957), 195.

place within the formal organization.49

In respect to the degree of professional participation in the

formal structure of an organization the hospital may be considered a

model toward which other organizations are proceeding. The hospital

could be thoughtof as having provided a proving ground upon which

management solution to the problem attendant upon professionalization

has been tested. Problems which hospitals are attempting to master

today may be the problems of general business management tomorrow.

If hospitals are representative of the universal structure of organi-

zations, departing along a continuum from the modal organization in

that degree to which it is marked by accommodation to the larger number

of participating professionals, and if business and other institutions

are progressing on a trend toward greater professional participation,

then the hospital may provide the solution to incipient managerial

problems or at least suggest the range of problems which will someday

have to be faced.

Many superficial aspects of the range of problems associated with

professional participation have already been commented upon in other


49Warren G. Bennis, in Changing Organizations (New York: McGraw-
Hill Book Co., 1966), p. 25, notes: "Professional specialists, holding
advanced degrees in such abstruse sciences as cryogenics or computer
logic as well as the more mundane business disciplines, are entering all
types of organizations at a higher rate than any other sector of the
labor market."

50W. Richard Scott, "Professionals in Bureaucracies--Areas of Con-
flict," Professionalization, eds. Howard M. Vollmer and Donald L. Mills
(Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1966).

Scott comments that: "It appears that the higher the general prestige

of the professional group and the more central their skills to the

functioning of the organization, the more likely they are to be suc-

cessful in their attempt to control the conditions under which they

work, with the result that there is less actual conflict between

professionals and representatives of the bureaucracy."51 Kast and

Rosenzweig addressing themselves specifically to the situation in hospi-

tal organizations remark that a continual power conflict exists between

the various professionals and the administration, and that this conflict

resists analysis by the traditional models of organization.52 And,

William G. Scott comments that the impact of professionalization may be

so profound that the way of performing work in bureaucracies may become

obsolete, and new forms of organization must be revealed.5 Elsewhere

he notes, on this same basis, that the goal of organizational theory

must be the development of organizational forms which allow for the

opportunity of self-realization of the individual within the organi-
zation.54 This latter proposition, and its link with professionali-

zation in the prototype organization, will be of major concern in this


511bid., p. 275.

52Fremont E. Kast and James E. Rosenzqeig, "Hospital Administration
and Systems Concepts," Hospital Administration, XI (Fall, 1966), 25.

53William G. Scott, Organization Theory: A Behavioral Analysis, p. 260.

54 bid., p. 258.

As has already been noted Katz and Kahn provide a sharp dichotomy

between those organizations whose through-put is the transformation of

objects versus those which are concerned with the molding of people--

essentially the separation of business from non-business forms of organi-

zation with hospitals and educational institutions included as typical

of the latter, and with due exception provided for those business organi-

zations labeled as "tertiary economic structures" which provide service

functions.5 While notable differences in the structure of organizations

and the process of management may be related to the materials which pro-

vide the basis for the productive process conducted in the organization

a more suitable differentiation is provided by the technological methods

employed in the processing function. In other words it is product which

dictates the technology of production and its associated managerial

process and organizational structure rather than the nature of the

material being transformed. The basis of this contention rests in the

observation that the objective of the organization, as it is linked to

the larger society, provides the basis for structure, process, and

New evidence indicates that the departure from the structure of the

universal organization is functionally related to the technology of


55Katz and Kahn, p. 115.

56This point will be more fully developed in Chapter II.

Joan Woodward, Industrial Organization: Theory and Practice
(London: Oxford University Press, 1965), p. 50.

That is: ". .forms with similar production systems appeared to have

similar organizational structures.'58 The extremes of technology identi-

fied by Joan Woodward are production of units to customers' requirements

and continuous flow production of liquids, gases, and crystalline sub-

stances with mass production of individual items assuming a middle ground
position.59 Intermediate between the mass production techniques and each

of the extremes lie batch methods of production.60 Woodward's study of

100 industrial firms in South Essex allowed a separation into those which

conformed to "mechanistic" and "organic" forms of organizational struc-

ture. "'Mechanistic' systems are characterized by rigid breakdown into

functional specialism,precise definition of duties, responsibility and

power, and a well developed command hierarchy through which information
filters up and decisions and instructions flow down.. "'Organic'

systems are more adaptable; jobs lose much of their formal definition,

and communications up and down the hierarchy are more in the nature of

consultation than of the passing up of information and the receiving of

orders." Woodward's conclusions provided that:

there was a tendency for organic management systems to
predominate at the extremes of the technical scale, while
mechanistic systems predominated in the middle ranges. Clear
cut definition of duties and responsibilities was characteris-
tic of firms in the middle ranges, while flexible organization

581bid. 591bid., pp. 38-39. 60bid.

6Woodward, p. 23, citing Tom Burns, Management in the Electronic
Industry--a Study of Eight English Companies. Social Science Research
Centre, University of Edinburgh; and Honor Croome, The Human Problem of
Innovation (H.M.S.O., 1960).

62Ibid. 3 bid.

with a high degree of delegation both of authority and of
responsibility for decision-making, and with permissive and
participating management, was characteristic of firms at the
extremes. There was less "organizational consciousness" at
the extremes; it was the firms in the middle rages which
found it easier to produce organization charts.

Much of the criticism over the employment of management techniques

associated with the management process derived from the structure of

the universal organization is based upon the concept that the manage-
ment process is exclusively associated with mass production technology.6

The defense of the integrity of a separate administrative process such

as hospital administration is often offered in terms of the inapplica-

bility of these productive techniques to the hospital situation.

Georgopoulos and Mann, in commenting upon the differences between hospi-

tals and business, include the following comment in regard to the former:

The nature and volume of work are variable and diverse, and
subject to relatively little standardization. The hospital
cannot lend itself to mass production techniques, to assembly
line operations, or to automated functioning.66

And elsewhere Georgopoulos comments:

S. .the main objective of the hospital is to render person-
alized care and treatment to individual patients, according

Woodward, p. 64.

65Etzioni, in Comparative Analysis, p. 214, comments that utili-
tarian that is, economic organizations are as a rule highly routinized.
He describes as typical of business organizations the mechanistic
structure and process described by Woodward.

6Georgopoulos and Mann, p. 63.

to their particular problems and needs, rather than mass
production or the manufacture of some uniform product.
Consequently, much of the work in the system cannot be
standardized or mechanized.67

However, as the work of Woodward indicates, the mass production model

of the business organization is a limited case.

This phenomenon of diverse forms of accommodation to technology is

well recognized in the management literature at the same time as the

universality of structure and management process is being supported.

Ernest Dale, the foremost empiricist in management thought, has

commented upon the diversity of technology employed in various enter-

prises and how the technology employed limits the structure of organi-
zation which can be utilized. But in spite of this diversity of

structure and associated technology, Dale maintains that common organi-
national characteristics can be distinguished. Therefore, it can be

accepted that the management process and its collateral techniques are

associated with a wide range of organizational forms.

More important for present purposes is the observed similarity be-

tween the unit production methods of industry described by Woodward and

the patient care process performed in general hospitals. The product or

service produced in the unit production firm is tailored to the customer's

6Georgopoulos, p. 12.

68Ernest Dale, Management Theory and Practice (New York: McGraw-
Hill Book Co., 1965), p. 197.
69 Ibid.

specification. As Scott has noted, the foreman in charge must be highly

qualified and capable of handling the variety of technical problems

which often occur with the production of a customer's order under job

order conditions.70 The nurse in charge of the comparable task in the

general hospital faces a similar situation and must be as highly techni-

cally qualified. Each patient, in addition to being a unique personality,

is manifesting a disease condition unique to his individual characteris-

tics, and, in addition, has specified for him a course of treatment

peculiar to the individual evaluation of his physician. While the prod-

uct in each case is dissimilar from any other case and the specified

productive techniques are totally unrelated, the process itself, from a

structural and managerial point of view, is quite similar. In each case

it would be expected that an organic form of organization and management

would be present, and, in fact, such is found to be true.

In many respects the unit production industries reported by Woodward

are quite unsophisticated as compared to the typical general hospital

although they both adhere to the organic form of structure. For example,

Scott, reporting on the unit production method firms, noted that, because

of the small size of the job order shop, the technical staff usually is

not large; the staff has not usurped the foreman's prerogatives; and the

functions of planning organizing, and controlling still devolve on the

foreman to a great extent.71 As will be demonstrated, the hospital is

70William G. Scott, Organization Theory: A Behavioral Approach, p. 345.

71 bid.

quite different in these specific respects. It would therefore appear

that the technological process itself is determining of the organic

nature of the appropriate organizational structure.

It will be hypothesized that the hospital organization provides

a prototype for large and complex organizations devoted to the tasks of

unit production. It will be further hypothesized that the hospital

organization is descriptive of the organic forms of management associ-

ated with such organizations, and that, as Woodward describes it, a

technological continuum exists along which the fundamentals of the

management process and its associated techniques are transferable. It

will also be suggested that the prevalent trend is toward a reduction

of emphasis upon the production of products in the manner conducive to

assembly line techniques and a growing emphasis upon unit and process
methods of production.72 In that both of these latter technologies of

production employ organic methods of management and organization the

hospital will provide a model of successful accommodation as well as of

problems yet to be resolved.
Bell has described a discretionary model of organization. His

position is that three independent variables are associated with the

72The arguments advanced by Marshall McLuhan, in Understanding
Media: The Extensions of Man (New York: The New American Library, 1964),
pp. 281-282, are perhaps representative of the cultural implications
involved in the reduced employment of mass production techniques and an
increased emphasis upon unit production methods.

73Gerald D. Bell, Organizations and Human Behavior (Englewood Cliffs,
N.J.: Prentice-Hall, Inc., 1967).

degree in which an employee of the organization can render judgment

and exercise discretion in the performance of his assigned tasks.4

Bell's dependent variable is therefore the degree of discretion pro-

vided the employee. If extended to the organization as a whole one

can see the similarity with the organic structure described by Wood-

ward.75 Bell provides that the three independent variables which de-

termine discretion are the predictability of work, management control,
and professionalization. The individual will have relatively more

discretion in the accomplishment of his tasks if: the work assigned

is relatively ill-structured in respect to its patterned flow and the

method to be applied; management chooses to exercise loose control

over the employee, and; he is a professional by training.77 Bell further

believes that the independent variable, management control, can be con-

sidered related, or mutually determined, by the variables: predicta-
ability and professionalization. Blau and Scott also shed insight on

the relative laxness of management controls when the two factors of un-

predictability and professionalization are operative by referring to the

schema of Parsons which allows for clean-cut breaks between the techni-

cal and management levels of the hierarchy in such situation.7

7 Ibid., p. 99.

75Woodward, p. 23. Note that Bell's work and authorities are en-
tirely independent of the research conducted by Woodward in England.

7Bell, pp. 99-100.

77 bid. 781bid., p. 99.

79au and Scott, 39.
Blau and Scott, p. 39.

Predictability, as expressed by Bell, is comparable to the in-

dustrial examples presented by Woodward as the unit production tech-

nology. The essence of unit production is uniqueness--that which could

not be predicted from past experience--the one-of-a-kind task demand,

totally unrelated to the work performed in the past, or that which will

be performed in the future. Bell is obviously describing a broader

phenomenon than the limited industrial example of Woodward.

It is, therefore, these two variables which are selected as rep-

resentative of the influences which suggest the hospital as a prototype

of organizational structure. It will be maintained that the hospital

demonstrates a ready example of the influence of these two variables

when they are expressed in their most exaggerated form. Hospitals can

be considered as epitomizing the influence of professionalization of

the work force upon the organization structure. Hospitals represent the

furthest extent toward which unit methods of technological production

have been carried. If each of these factors can be considered as repre-

sentative of a trend within our society then one could expect that the

hospital would provide a model of the universal organization in transition.

It must be acknowledged that these two variables of interest are

not independent of one another except as a conceptual method of pro-

viding explanation of the phenomenon evidenced by the organic structure

of organization. Bell admits a relationship between the skills required

to master the unpredictable work assignment and the techniques associated
with the professional employee. Woodward remarks on a resemblance

Ibid., pp. 99-100.

between the unit and process production firms in addition to their

organic structure, that being the degree in which each employs a large

number of skilled workers in contrast to the batch and mass production
firms.1 Vollmer and Mills also note the link between technological

advance toward sophisticated techniques and rapid increase in profes-
sionalization. It could also be argued that the link between the two

is not in the single direction of first, unit production technology and

then professionalization. Increased degrees of professionalization may

supply the value system which demands the treatment of the productive

act as a unique experience only amenable to unit production methods.

However one would approach this linkage between professionali-

zation and the individualized product within the organic organization

is not of the essence of the argument being presented. They can be

treated in their separate entities as suggested earlier or as a blend

of manifest phenomena in the manner related above. It is even possible

to relate additional factors such as increasing levels of education to

reinforce the dynamic process of cultural change which is shifting the

universal organization along the continuum toward an organic structure.

Of more practical importance is the availability of a prototype which

will assist in the understanding of the organizational processes in-

volved in the shift from mechanistic to organic structures.

W8oodward, p. 61.

82Vollmer and Mills, p. 22.

Other writers have suggested within a similar context the prototype

possibilities inherent in the hospital organizational structure. Bennis

allows that hospitals along with universities and research and develop-

ment organizations appear to mark the trend along which other organi-

zations are traveling, and he advises investigation of the problems and

attributes of these organizations for their prototype possibilities.8

Perrow alludes to a natural history of organizational change and sug-

gests that profit-making organizations could look to hospitals and

other voluntary service organizations for possibilities in the areas of

tasks, authority, and goals.84 Freidson suggests that the study of

industrial sociology might benefit from study of the hospital organi-

zation in regard to service industry relations with consumers.8 And,

Hughes provides that:

.the organizations in which professions work show patterns
of authority and interaction which, according to earlier theories
of organization, could not possibly work. They are, in general,
organizations with more staff than line; their special import-
ance for the study of social organizations is that they give us
new models to work on just when business organizations, which stu-
dents have been inclined to take as the prototype of rational
organization, are themselves becoming so cluttered by staff ad-
visors (of various old and new professions) that the line is
scarcely distinguishable, and this is very frustrating. The

Warren G. Bennis, "Organizational Developments and the Fate of
Bureaucracy," Industrial Management Review (Spring, 1966), p. 51.

8Charles Perrow, "The Analysis of Goals in Complex Organizations,"
Readings in Organization Theory: A Behavioral Approach, eds. Walter A. Hill
and Douglas M. Egan (Boston: Allyn and Bacon, Inc., 1966), p. 143.
8Eliot Freidson, "Review Essay: Health Factories, The New Industrial
Sociology," Social Problems, XIV (Spring, 1967), 493.

newer generation of businessmen, instead of proposing that
universities, hospital, and government agencies (in which
the efforts of professional people are somewhat coordinated)
be run in a business-like fashion, may turn to these mad-
houses for ideas on how to organize their own enterprises;
for the staff people, insofar as they are really professional,
have another loyalty than that to their employers; they be-
long to professions which have some sense of solidarity and

If the hospital is accepted as a prototype and it can be demon-

strated that it lies on a continuum along which the universal organi-

zation can be described then the means of transference of management

principles from the modal organization to the prototype can be facili-

.tated. More important, it will be possible to consider the accepta-

bility of these principles in the prototype organization on the basis

of their relationship to the structure of organization. If a continuity

of structure does exist it may well be that new lessons learned in the

prototype can be transferred to the modal organization to ease the pains

of passage.

8Everett C. Hughes, "The Professions in Society," Canadian Journal
of Economics and Political Science, XXVI (February, 1960), 58-59.
8For a discussion of the concept of principles of management and
their association with "principles of organization," see Terry, pp. 16-
17; or, Hutchinson's summary of the management principles, p. 103. The
link between the principles of management and the universal organization
is outlined by Ralph Currier Davis, in The Fundamentals of Top Manage-
ment (New York: Harper and Row, Publishers, 1951), p. 1. For the con-
cept of application of these principles within the nursing function of
hospitals see: Thora Kron, Nursing Team Leadership (Philadelphia: W.B.
Saunders Co., 1961), p. v. Woodward, pp. 245-246, comments upon the
impact of her research on the accepted principles of management and the
reaction of the management community in this regard.

New interest is being generated in regard to the solution of social

problems using the techniques of business management. Zalaznick reports

in a recent article the trend in university schools of business to

broaden their scope to encompass diverse administrative problem areas,

including the health care field, in recognition of the broad trans-
ferability of managerial techniques. Much of the success of this

attempt, as noble as its aim, will be dependent upon a proper appreci-

ation of the organizational structure involved. As Cyert and March have


When we leave the area of the firm, we are likely to hear with
impressive frequency that the structure, position, task, or his-
tory of a certain organization is unique. What we tend to forget
is that the uniqueness in this sense is not an attribute of the
organization alone; it is an attribute of the organization and
our theory of organization. An organization is unique when we
have failed to develop a theory that will make it nonunique.
This uniqueness is less a bar to future theoretical success than
a confession of past theoretical failure.89

This study will attempt to relate the methods of dynamic organi-

zational analysis which underlie the management process to the hospital

structure. The two factors of relative professionalization and sophisti-

cated unit production technology will be considered as the elements of

concern in the dynamic process. The Appendix to this report will relate

the substance of the dynamic analysis and its place within the variety of

88Sheldon Zalaznick, "The M.B.A.: the Man, the Myth, and the Method,"
Fortune, LXXVII (May, 1968), 168-171, 200,202, and 206.

8Richard M. Cyert and James G. March, A Behavioral Theory of the
Firm (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1963), p. 287.

topics labeled as organization theory. The structure of hospital

organization will be briefly sketched in a form amenable to the dynamic

analysis--that is, the question of objectives will be investigated and

the structural elements of line and staff presented. With these estab-

lished it will be possible to investigate the anomalies of hospital

organization which have been reported by the authorities and which support

the allegation of a dichotomy of structure. The prototype organization

will then be described in terms of those characteristics which are

unique to this form of organization and as they relate to the dynamic

process itself. In conclusion the report will attempt to describe the

management process as it must cope with the most salient of the proto-

type characteristics from the coordinative point of view.



The concept of formal organization implies a grouping of human

participants for the purpose of achieving specific objectives. Mooney

expresses this concept as follows: "Organization is the form of every

human association for the attainment of a common purpose." Although

many aspects of formal organization can be debated these two elements

of a multiple of participants and specific objectives are accepted by

all reporters as the fundamental characteristics of this form of social

unit. This expression of formal organization is a narrower construction

than the concept of social organization.2 Blau and Scott denote the

broader idea by the elements of human participation and a shared value

system. This shared value system may be construed as providing ob-

jectives to the social grouping; however, these values are accepted as

James D. Mooney, The Principles of Organization (Revised Edition;
New York: Harper and Brothers, Publishers, 1947), p. 1.
The following writers are representative of this view of formal
organizations. Rocco Carzo, Jr. and John N. Yanouzas, in Formal Organi-
zations: A Systems Aoproach (Homewood, Ill.: Richard D. Irwin, Inc.,
1967), p. 11, provide that: "Formal organizations are different from
other social institutions in that they are designed to accomplish an ex-
plicit purpose." Talcott Parsons, in "Suggestions for a Sociological
Approach to the Theory of Organizations--I," Administrative Sciences
Quarterly, I (September. 1956), 64, notes that: ". .primacy of orienta-
tion to the attainment of a specified goal is used as the defining charac-
teristic of an organization which distinguishes it from other types of
social systems."

peter M. Blau and W. Richard Scott, Formal Organization (San Fran-
cisco: Chandler Publishing Co), pp. 1-5.

residing in the culture of which the individual group member is a part.

Formal organizations, on the other hand, are characterized by objectives

which are formally selected for achievement.5 This purpose implied in

formal organizations when taken as its unique characteristic can be

demonstrated to provide the essential elements of organizational design

and, therefore, it is the source of the concept of universality of


The use of the word objective for this essential purpose in formal

organizations can be debated from a semantic point of view. In the

literature of management the word is found interchanged with the word

goal with no apparent resulting confusion; standard dictionaries imply

that the words, objective and goal, can be used synonomously. Specific

authorities usually define the words separately when they are to be

used for purposes of exposition. Hutchinson, for example, provides that

goals are guides for organizations while objectives are to the individ-

ual what goals are to the organization. However, it would appear that

the consensus in regard to usage contained in the literature concerning

organizations relates the word objective to the common purpose implied

in these structures. For purposes of this report the word objective

will be used in a similar manner to denote the broad, overall purpose

inherent in formal organizations. Where the usage of the terms cited

from other sources in this regard conflicts with this intention the

4lbid, pp. 4-5. 5Ibid., p. 5.

John G. Hutchinson, Organizations: Theory and Classical Concepts
(New York: Holt, Rinehart and Winston, 1967), p. 39.

meaning may be implied from the context in which it appears or the term

will be suitably clarified.

This definition of formal organization does not imply that the ob-

jective of the organization is determined by the human participants in

the organization itself, or by some selected segment of the participants.

The objective of the organization is resident in the values and needs of

the society which it serves--the management of the organization, at best,

performs an interpretive function which recognizes the apparent, or in-

cipient, desires of the society and develops the structure to service

these values and needs. It is this vital link between the organization

and society which is overlooked in many of the descriptive studies of

organizational structure, although in the practical affairs of man an

error arising in the interpretive function should quickly be corrected

by the nature of this link and the system by which it is supported.

Talcott Parsons speaks of this link between the organization and

society as resident in the power which is a generalized societal resource

allocated to the various organizations to act as an agent for the society

in the attainment of its various objectives. Davis clarifies the link

between society and the business organization by visualizing this power

in the expression of the right to private property and its interpretation

under law. In return for the authority granted by this institutionali-

Talcott Parsons, "Suggestions for a Sociological Approach to the
Theory of Organization--Il," Administrative Sciences Quarterly, I (December,
1956), 226.
8Ralph Currier Davis, The Fundamentals of Top Management (New York:
Harper and Row, Publishers, 1951), p. 91.

nation of society's power the business organization is expected to pro-
vide the values which society desires. Dale simplifies this link in

the case of business enterprises by noting that these organizations

define their objective by determining what their customers are really

paying them for rather than narrowly identifying their objective with
a specific, and perhaps transient, product. John Mee makes this same

concept dynamic by noting the various environmental forces which cause

a constant process of objective interpretation by an organization if it

is to remain viable within the society which is the source of its authori-

ty.1 While these latter authorities relate this concept of the source

of business objectives in the values desired by society, the power link

between all organizations and the society remain the same. In fact,

it can be maintained that the link of the voluntary hospital organiz-

ation to the society is typically through the mechanism of the right to

private property as described by Davis, rather than through the more

subtle mechanism of the right of association which determines the ob-

jectives of various political and purely social organizations.

This approach to the determination of the source of organizational

objectives has been criticised as being too idealistic and at variance

9 bid.

10Ernest Dale, Organization (New York: American Management Associ-
ation, 1967), p. 54.

1John F. Mee, Management Thought in a Dynamic Economy (New York:
New York University Press, 1963), p. 94.

with the true nature of the organizational process. Etzioni remarks

that: "In practice, goals are often set in a complicated power play

involving various individuals and groups within and without the organi-

zation, and by reference to values which govern behavior in general and

the specific behavior of the relevant individuals and groups in a particu-
lar society."2 This difference in regard to the methods whereby power

is employed in the establishment of objectives is explained by Parsons

to be the result of the level of analysis which is employed by the re-

searcher. He suggests that the determination of objectives through

individual power acts, as a theoretical design, has resulted from the

role and group analyses which have been performed on a micro-organi-
national level, holding all other influences constant. More realistic,

he suggests, is an acknowledgment of the disciplinary powers of the

larger, encompassing society.1

Closely linked to the argument advanced by the proponents of the

role and group behavior approach to the determination of objectives is

the apparent diversity of objectives contained within any single organi-

zation. Etzioni considers this to be a phenomenon resulting from the

perversion of the original objective of the organization derived from
society's desires. He maintains that once organizations are formed

1Amitai Etzioni, Modern Organizations (Englewood Cliffs, N.J.:
Prentice-Hall, Inc., 1964), pp. 7-8.

3Parsons, "Suggestions. .1," p. 67.

14 bid. 151bid.

6Etzioni, p. 5.

they acquire their own needs and these often become the masters of the

organization. Kast and Rosenzweig believe that traditional manage-

ment theory was amiss in assuming a clear-cut objective which provided

little insight into the multiple objectives of complex organizations.

These authors believe that systems theory will overcome this supposed

deficiency of traditional theory; this belief is supported in a similar

manner by Katz and Kahn.19 The latter authors maintain that in spite of

this oversight on the part of traditional theorists the stated objective

as expressed in policy may be a starting point in organizational analysis.20

These criticisms in regard to the multiple objectives found in organi-

zations, negating the concept of a single objective inherent in the

traditional theory, would be valid, for such are observed to exist, if

traditional theory held such a point of view. However, such is not the

case, as will be elaborated later.

What is maintained, in the mainstream of management thought, is

the concept of the primacy of a single organizational objective--that

objective which is derived from the values and needs of the society in

its environmental context. This point is emphasized by Fox in his


18Fremont E. Kast and James E. Rosenzweig, "Hospital Administration
and Systems Concepts," Hospital Administration, XI (Fall, 1966), 27.
1Daniel Katz and Robert L. Kahn, The Social Psychology of Organi-
zations (New York: John Wiley and Sons, Inc., 1966), pp. 15-16.
20 bid.

reiteration of the primacy of this objective in regard to business


The right to engage in private business stems from the right of
private property, and this right may be modified, extended, or
withdrawn as society desires. A firm must be concerned with
formal goals--service to society--if it wishes to survive and
prosper. . For the success and sustained existence of such
a firm in our society depends on its ability, relative to the
ability of other producers, to meet the need of customers

This service to society--the salable values that the business plans to

create and distribute--are defined as the primary service objectives of

the organization.22

This concept of the discipline of the market place is well accepted

in economic theory as applied to the business organization. The apparent

pleasure or displeasure of the society is often witnessed through the

accountant's measure of profits gained or lost; however, first causes in

these cases must be attributed to the link between the organization and

the society as manifest in the primary service objective of the organi-

zation. Profits of a particular organization must ultimately be related

to the finesse with which the management of the organization has performed

its interpretive function.

The concept of profits as an organizational objective has often been

used as a mark of separation between various organizations. This has been

2William McNair Fox, The Management Process (Homewood, Ill.: Richard
D. Irwin, Inc., 1963), p. 68.
22 bid., p. 69.
Ibid., p. 69.

expressed as the basic dichotomy between the hospital and business

structures of organization by many commentators. Bloom considers the

profit motive as the fundamental difference in objectives between the

two forms of organization with the hospital substituting an orientation

toward service to the community in place of the 'baser' motivation of

the business organization.23 Georgopoulos and Mann extend this concept

even further by maintaining that the economic value of the hospital

organization's objectives are secondary to their social and humanitarian
values. Undoubtedly this refers to some idea that the primary service

objective of the business organization is the product itself rather than

the utility which it provides to society. Yet this is at variance with

the observations of management theorists who reiterate an emphasis upon

the values provided to society in acknowledgment of the practical com-

ments of analysts who emphasize the necessity of business organizations

to define their objectives in terms of ultimate utilities rather than

narrowly upon specific products which may soon be outdated. The non-

profit categorization of voluntary hospital neither removes the conflict

among the internal membership of the organization in regard to the share

of each in the sustaining values provided by the enterprise, nor does it

eliminate the perverted emphasis upon the product itself rather than the

utility provided which may be as prevalent in non-profit organizations as

2Samuel W. Bloom, The Doctor and His Patient (New York: The Free
Press, 1963), p. 167.
2Basil S. Georgopoulos and Floyd C. Mann, "The Hospital as an Organi-
zation,' Hospital Administration, VII (Fall, 1962), 62.

those which contain membership sustained by profit.

Even those authorities who recognize the role of profits as a

measure of effectiveness unique to business organization fail to recog-

nize that other measures of performance are equally as valid in the

determination of the relative success with which the organization has

served its primary service objective. The use of a measure other than

profit does not remove the organization from the realm of economic per-

formance. Rosenberger, however, appears to express the concept that

the profit motive is determinant in the selection of management.25

Nevertheless, it appears fallacious to argue that the selection of

organization leaders would be based on anything less than the ultimate

success of the organization in meeting its service objectives. Etzloni

appears to be the originator of this particular argument.26 Although

elsewhere he modifies this viewpoint to the extent that while both forms

of organization are responsive to measures of effectiveness the business

organization is able to facilitate this measurement through the availa-

bility of the profit gauge.27 This concession to a similarity among all

organizations is further extended by his recognition that the profit

measure of private business must be qualified by the vagaries of cyclical
economic activity.2

25Donald M. Rosenberger, "A New Look at Hospital Organizations,"
Hosoitals, XXXVI (February 1, 1962), 44.
26Amitai Etzioni, "Authority Structure and Organizational Effective-
ness," Administrative Sciences Quarterly, IV (June, 1959), 49.
Etzioni, Modern Organizations, p. 9.
28 bid.

It is rare in management literature to find a statement which

reflects profit as the objective of a business organization. This

notion appears more frequently in the writings of those outside of

the disciplines of management and economics where an attempt is being

made to differentiate the various forms of organization. Actually,

the terms profit organization and non-profit organization are legal

terms rather than some analytical device involved in the determination

of the organizational and managerial process.

One sociologist who has taken cognizance of the relationship of
the economic and social systems is Talcott Parsons. Based on his

studies of the institutional structure of society he asserts that profit

cannot be the primary organizational goal because profit-making is not

by itself a function performed on behalf of the society as a system.30

Mee makes the same point by asking two questions:

What is the primary purpose of business enterprise--to serve
customers and provide employment or to utilize and increase
the capital of owners? Is profit the end product, or is it a
feedback means to provide more and better products and human
satisfactions for more people?31

Urwick's position taken at an earlier time is just as adamant in regard

to the misconception in regard to profit and the objectives of the

2See particularly Talcott Parsons and Neil J. Smelser, Economy and
Society (New York: The Free Press, 1956), for a structure of society
which incorporates the economic system.

30Parsons, "Suggestions. .I," p. 68.

3Mee, p. 74.

business organization. He maintains that profit is a stimulus to

individuals to participate in business activity, but, more important,

it is also a measuring rod, a test of the success with which the real

objectives of the business are being attained.33 Davis provides that

the objective of a business is service, while profit is a personal
objective of a businessman. A business will fail, Davis maintains,

when any important group within it, whether capital, management, or

labor, succeeds in subordinating the organization's primary service

objective to its personal interests.35 And, Terry incorporates the

economic argument of profits being a residual resulting from the pro-

duction and distribution of a product or service directed toward satis-

faction of the organization's primary objective of service to the


It could be maintained that many of the above writers cited have

a vested interest in emphasizing a primary objective of service to

society because they are of the management school of thought and would

be expected to support the transferability of the management process

across organizational lines. Nevertheless, it is found that this same

L. Urwick, The Elements of Administration (New York: Harper and
Row, Publishers, 1943), p. 27.

4Davis, p. 104.

351bid., p. 105.

G6eorge R. Terry, Principles of Management (5th ed. rev.; Homewood,
Ill.: Richard D. Irwin, Inc., 1968), pp. 37-38.

conclusion is being derived in other approaches to organization theory

since the pioneering efforts of Parsons. The open-systems theory ex-

pounded by Katz and Kahn notes the appearance of intrinsic and extrinsic

functions performed by all organizations. The intrinsic function is

the transformation process which results in a product or service for

society, while the extrinsic functions are the relationship of the

organization in terms of inputs and outputs with its surrounding environ-

ment. Profit would be considered as an extrinsic link between the busi-

ness organization and the providers of capital inputs as it is subsidiary

to the primary transformation process.39 As they summarize this concept

in terms of the efficiency at which the organization performs the trans-

formation process and maintains its relationship with the surrounding

environment it matters not whether the organization is specified as
non-profit. For:

The concept of efficiency does not have meaning only for business
organizations, and the survival benefits of efficiency are not
limited to profit-making organizations. These notions are in-
herent in the characteristics of human organizations as open
systems. They remind us that the ultimate decision to give or
withold the needed organizational inputs lies in the environment,
and that the larger social environment in this way holds the
power of life and death over every organization.4

The primary service objective of the hospital organization will only

3Katz and Kahn, p. 62.

8bid. 3 bid. 40bid.
Ibid., p. 161.

briefly be mentioned at this point for the concept best receives

definition in its interplay with structural design. In fact, by

reference to the various authorities it is obvious that little dis-

agreement exists in regard to the primary service objective because

it is stated in the most general nature as it regards the service

provided to society. Georgopoulos maintains that little ambiguity

exists in regard to the primary organizational objective of hiqh-

quality care and service to the patient and the subordination of vari-

ous functions such as teaching and research to this objective.4

Elsewhere he modifies this slightly by providing that the primary

objective of a hospital is to provide adequate care and treatment to

its patients, recognizing that such care must be within the limits of
medical knowledge and reasonable allocation of resources. Although

Wessen establishes a hierarchy of objectives for the hospital organi-

zation he awards the primary position to the giving of care to patients.4

As will be seen the other objectives on his hierarchy can be included in

the category of secondary and collateral service objectives. MacEachern

also identifies the primary function of the hospital as being the care
of the sick and injured.45 It will be seen, however, that although

2Basil S. Georgopoulos, "The Hospital System and Nursing: Some Basic
Problems and Issues," Nursing Forum, V (1966), 8-11.
Georgopoulos and Mann, p. 50.

4Albert F. Wessen, "Hospital Ideology and Communications between
Ward Personnel," Patients, Physicians and Illness, ed. E. Gartly Jaco
(New York: The Free Press, 1958), pp. 458-459.

45Malcolm T. MacEachern, Hospital Orqanization and Management (Berwyn,
Ill.: Physicians' Record Company, 1962), p. 29.

general agreement exists in regard to this statement of the primary

service objective of the hospital organization there can be considerable

disagreement in regard to the scope of this definition of objective

when it is employed in the analysis of the structure of the hospital

organization. This point will be further developed in the following


Additional insight is provided by this definition of primary service

objective of the hospital organization as it is amplified by various

other authors. Wessen remarks that the "heart" of any hospital is the

patient ward, for it is here that the basic work, or primary service

objective, of the organization is carried out. A similar comment is

made by MacEachern in his definition of the functions of the nursing

service of the general hospital. In each case the locus of the

primary service objective of the hospital organization is found in the

nursing service and the ancillary patient care functions. As Katz and

Kahn would remark, it is here that the intrinsic functions of transfor-

mation are performed which result in the satisfaction of the primary

objective of the organization.

It is maintained that the service provided by the hospital organi-

zation as detailed by these expressions of a primary service objective

are identical in form with that provided by other organizations. The

hospital organization's link with the larger society follows a pattern

46essen, p. 448.
47acEachern, p. 512.
MacEachern, p. 512.

described for other organizations which provide a tangible service to

society. It is, therefore, not in the primary objective of the hospital

organization that a separation between the hospital and the universal

structure of organization will be discovered.

The importance of this point must be emphasized for it is with the

statement of organizational objective that the analysis of organizational

structure begins and it provides the thread of analysis throughout. The

basis of this argument is, as Dale states, "Organization cannot be di-

vorced from the idea of purpose.48 He includes this point as the first

of the classical principles of organization.4 Carzo and Yanouzas also

identify the classical concepts implied in this notion that the process

of organization begins with objectives.50 Before one can organize

intelligently, Terry maintains, one must know the aims of an organization,

and this objective statement helps determine the type and number of

activities to be carried out, their relative importance, the type of

people to include, and the social groups which will probably be formed.51

Woodward states that the first step in building an organizational struc-

ture is to determine what purpose the organization has to serve.52

8Dale, p. 9.

Ibid., p. 27.

50Carzo and Yanouzas, p. 28.

51Terry, p. 286.

52Joan Woodward, Industrial Organization: Theory and Practice
(London: Oxford University Press, 1965), pp. 123-124.

Davis concurs that,"The characteristics and requirements of functions

and functional relationships are determined basically by the require-

ments for the satisfactory accomplishment of objectives."53

Davis describes the process whereby the structure of organization

is developed from the organizational objective in his Principle of
Functional Emergence. He outlines the process of division of the

objective of the organization into logical elements which are grouped

on the basis of their functional similarity to provide for the most
effective and economical attainment of this objective. In sum, the

values demanded by the customers of the organization are the determi-

nant of the structure which will be developed

Simon's treatise on the decision-theory of organization described

a similar process of specialization which follows functional lines de-

rived from the object of the organization.57 An important consideration

in his argument is that this process implies the division and speciali-

zation of the overall organizational objective into sub-objectives

which creates a hierarchy of objectives to match that of functions.58

Simon demonstrates a comprehensive theory of decision-making based upon

this fundamental process of organizing derived from functional differenti-


5 Davis, p. 18.

541bid., p. 328. 551bid. 56Ibid., p. 330.

57Herbert A. Simon, Administrative Behavior (2nd ed.; New York: The
Free Press, 1957), p. 190.


While each of these authorities who describe a process of functional

differentiation flowing from the service objectives of the organization

is identified with management theory, the same process is suggested by

work on organization theory in other disciplines. One example is offered

in Seeman and Evans report on an elaborate study to develop criteria of

performance in the hospital setting.59 Their study defined functional

elements within the structure of the hospital which were related to

specific sub-objectives of the overall organizational objectives and

established that these were identifiable as basic organizational units.60

In management theory perhaps the best summary of the process in-

volved in organizing the activities of enterprise based upon organization

objectives is provided by Koontz and O'Donnell.61 They describe the

fundamental logic of organizing by the following seven sequential steps:

1. establishment of enterprise objectives;
2. formulation of derivative objectives, policies, and plans;
3. determination of activities necessary to execute these
policies and plans;
4. enumeration and classification of these activities;
5. grouping of these activities in the light of human and
material resources available and the best way of using

59Melvin Seeman and John W. Evans, "The Objective Criteria of Perform-
ance," Medical Care: Readings in the Sociology of Medical Institutions,
eds. W. Richard Scott and Edmund H. Volkart (New York: John Wiley and Sons,
Inc., 1966), pp. 488-501.

60Ibid., pp. 489-491.

6Harold Koontz and Cyril O'Donnell, Principles of Management (3rd
Edition: New York: McGraw-Hill Book Co., 1964), pp. 212-213.

6. assignment to each grouping, normally through its head, of
of the authority necessary to perform the activities; and
7. tying these groupings together horizontally and vertically,
through authority relationships and information systems.b2

A recognition of the existence of a primary service objective in all

organizations obviously does not answer the question as to the source of

the variety of activities which are observed in every organization.

These activities can ultimately be traced to the primary purpose of the

organization, but their relationship to this objective is often tenuous

and remote. It would neither be correct to ignore the multiplicity of

unique goals which have been noted by observers, nor would it serve the

purpose of the organizational analysis which is being attempted. It may

already have been noted that the authorities cited have frequently

pluralized the concept of objective, and this should now be explained.

Davis broadly separates the objectives of organizational activity

into primary and secondary values to be supplied by organizational

elements. The primary values are those which have been defined as the

primary service objectives of the organization as discussed above.

Secondary values are those purposes which must be accomplished to dis-

charge satisfactorily the primary service objective. The secondary

values which the organization is designed to supply may be broadly sepa-

rated into the categories of purpose labeled by Davis as Collateral and


3Davis, pp. 100-101.
64 id.

Secondary Service Objectives. As Fox has indicated:

Carefully formulated primary service objectives present a
detailed enumeration of the salable values that a firm plans
to create and distribute. They provide a frame of reference
within which collateral and secondary objectives must be
developed and within which organization structure should be

This broadening of the objective base upon which the organization is

constructed should not de-emphasize the concentration upon the purpose

of the organization in relationship to the society it serves. Although

the criticism is believed to be unjustified, Scott has noted the possible

overemphasis in traditional theory upon a singleness of purpose within

organizations. He believes that this emphasis has tended to obscure

the inner workings and internal purposes of the organization itself.6

It will be maintained that the primacy of the objective of service is

well taken as it bears upon the problems associated with organizational

analysis; however, due recognition of the collateral and secondary service

objectives must be included if this analysis is to be complete. Davis

provides that the collateral service objectives are those values which the

organization is expected to supply to groups that are a part of the organi-

zation. While Davis extends this concept broadly to groups which are

651bid., pp. 102-106.

6Fox, pp. 69-70.

6William G. Scott, Organization Theory: A Behavioral Analysis for
Management (Homewood, Ill.: Richard 0. Irwin, Co., 1967), p. 107.
68 bid.

69Davis, p. 102.

associated with the organization and encompasses various social responsi-

bilities of the enterprise, the essential internal participants are the

owners and the workers. These collateral objectives are therefore the

values and needs which the individual participants require to be satis-

fied in order to elicit their continued contribution toward the satis-

faction of the primary service objective.

The secondary service objectives, as defined by Davis, include those

values that are needed by the organization to enable it to accomplish

its primary and collateral objectives with the required economy and

effectiveness.7 While this objective is subordinate to both the primary

and collateral objectives it is the vital link between the two. This is

apparent with the realization that in order to perform with satisfaction

the requirements of both the primary and collateral objectives there must

be a balance between the two, and this balance can only be obtained by

satisfaction of the secondary service objective of performance with re-

quired economy and effectiveness. The roots of this concept are contained

in the fundamental assumption of neo-classical economics which was eluci-

dated by Alfred Marshall as the 'great' Principle of Substitution.71 This

principle assumed that the manager would always arrange his resources in

the most efficient and effective manner technologically possible, for to

do otherwise would reduce his competitive position. This optimal balance

70 bid., p. 105.

7Alfred Marshall, Principles of Economics (8th ed.; London: Mac-
millan and Company, Ltd., 1920), p. 550.

of resources is rather more elaborate in economic terminology, but it

implies the searching behavior of the manager who strives to discover

the one best way to accomplish the primary objective of the organization

and satisfy the demands placed upon the organization by its internal

membership. While this principle can be assumed in economic theory it

receives explicit recognition in management theory as the stated secondary

service objective of the organization.

This same combinatorial arrangement of objectives in organizations

is commented upon by other authorities who do not necessarily choose to

use the same terminology employed above. Simon discusses the equilibrium

of the organization in terms of the separate demands placed upon it by

the owners, the customers, and the workers.72 Each of these parties to

the activities of the organization has his individual needs which must be

met if the organization is to survive, and the composite objective which

can be obtained from this complex of needs is expressed as an organi-

zational objective which is separate and distinct from those of the indi-

vidual parties which remain as supplementary objectives. He relates

each of these objectives to inducements provided to the various partici-

pants and notes the variety of organizational forms which can be derived

by slight modifications of these relationships of objectives. Bennis

performs a similar analysis of the organizational process through a

72Simon, pp. 16-18. 741bid., pp. 110-112.

3 bid.

relationship of objectives which he equates to a system of reciprocity

among the members of the organization and a system of adaptability to

the internal and external environment.75 The former, of course, is

equivalent to the collateral service objectives while the latter is a

complex included under the separate classifications of primary and

secondary objectives.

It is in the collateral service objectives of the organization that

the part played by profits in the business organization are clarified;

however, it must be noted that profits are but one among many collateral

objectives which must be satisfied if the organization is to succeed.

Fox expresses this by noting: "Primary service objectives are objectives

of the organization; collateral objectives are those of the people associ-

ated with the firm, without whom primary objectives could never be

attained.6 Davis believes that collateral objectives are expected to be

satisfied in some reasonable degree without any material or unnecessary

sacrifice of the primary service objective.77 These include good wages

for employees, good salaries for executive employees, good dividends for
investors, and other values, both tangible and intangible. The in-

tangible aspects involved in collateral service objectives will be

75Warren G. Bennis, Changing Organizations (New York: McGraw-Hill
Book Co., 1966), p. 7.

76Fox, p. 70.

77Davis, p. 10.


elaborated upon to some extent later in this study; however, it is

sufficient to note that this concept encompasses the broad range of

needs and values which participants in the organization will have appar-

ent and which can be satisfied in the process of participation. Berelson

and Steiner outline the ramifications of these intangibles in their ex-

pression of the objectives of the organization.79

It is the relationship of this complex of primary, collateral, and

secondary service goals which explain the behavior of organizations.

The processes involved in the satisfaction of these objectives is the

subject of extensive literature which is not relevant to the present

study. However, there are certain aspects of this determining process

which are interesting from the point of view of hospital organization

and its comparison with the model of organization described in the

management literature. Cyert and March provide that the goals of organi-

zation (which can be read as a sub-set of the complex of objectives) are

a series of more or less independent constraints imposed on the organi-

zation through a process of bargaining among potential coalition members

because the organization is a coalition of participants with disparate

demands, changing foci of attention, and limiting ability to attend to all

organizational demands simultaneously.80 They also maintain that this

coalition, or bargaining process is not unique to the business organization

7Bernard Berelson and Gary A. Steiner, Human Behavior: Shorter Edition
(New York: Harcourt, Brace, and World, Inc., 1967), pp. 54-55.

8Richard M. Cyert and James G. March, A Behavioral Theory of the Firm
(Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1963), p. 43.

but it is manifest in all organizations although the effect is not as

apparent in those enterprises which do not have the profit device of
measurement. Simon, however, maintains that the non-profit organi-

zation may not have as complicated a bargaining process, and conflict

will be much reduced allowing a more firm emphasis upon the primary

and secondary service objectives.82

It is apparent that the range of objectives described in the

management literature can also be described as operative in the hospital

situation. While the hospital is generally a non-profit institution the

needs of its individual participants are diverse and often in conflict

with the primary and secondary service objectives. Rather than finding

itself in conflict with the dividend claims of shareholders which is

manifest in business organizations, the hospital must cope with the

needs expressed by its unique form of ownership, the community as a

whole. These needs may often be in addition to the values which the

society has in regard to health care and which are expressed in the

primary service objective of care of the sick and injured. Many of the

subsidiary activities of thehospital organization may be directed toward

the satisfaction of collateral needs expressed by this community owner-

ship. The justification for such activities as the provision of park-

ing lots for visitors, cafeterias and gift shops which cater to persons

Ibid., p. 285.

82Simon, p. 121.

other than staff and patients, many of the public relations activities

of the administrator, and the support of volunteer associations, can

only be accepted under the concept of collateral values supplied to

ownership. These needs of ownership are expressed, and the refusal of

satisfaction on the part of management could have the same result as a

refusal of dividends to shareholders of a business organization. Un-

doubtedly the hospital administrator would welcome the clear-cut demands

of the profit seeker in preference to the diverse demands which owner-

ship places upon the limited resources of the hospital organization, and

which is often difficult to legitimize to other internal participants.

In the following two chapters the concepts of objectives developed

in this chapter will be employed to explain the structure of organi-

zation which exists in general hospitals. As has been noted the struc-

ture of organization can be explained by relating organizational ele-

ments to the objectives which they serve. It will be found that as

described in management literature the hospital conforms to the princi-

ple that the line of the organization has responsibility for the primary

service objectives while the broad concept of staff elements serve the

collateral and secondary service objectives inherent in all organized

forms of activity.83
forms of activity.

3Davis, p. 100-101.



The line of an organization refers to the chain of authority and

responsibility which exists in an organization and provides for a

specialization of the tasks associated with the creation and distri-

bution of the primary service values which the organization has chosen

to identify as its primary service objective. Each element in this

"primary chain-of-command" is unalterably identified with the process

involved in the creation and distribution of this primary service value.

The removal of any element of this structure of tasks would result

directly in the failure to satisfy the primary service objective.

The line of an organization is created by a process of devolution

of authority and responsibility for specific aspects of the work associ-

ated with the satisfaction of the primary service objective. This pro-

cess results in a hierarchy of organizational elements extending from

the head of the organization to the operative performers responsible

for the tasks which create the value that is the objective of the

organization. These elements are often identified as to their level in

this hierarchy of authority and responsibility by such designation as

units, departments, and divisions which imply that a lesser unit is
subordinate to the superior department, and so on. In the line of

Ralph Currier Davis, The Fundamentals of Top Management (New York:
Harper and Row, Publishers, 1951), pp. 333-338.
2 d., 338-3
Ibid., pp. 338-340.

the hospital organization the comparable elements may be designated as

teams, units, wards, and departments with much the same implication as

to a differentiation of the tasks to be accomplished and a necessary

subordination of one level to another.

The elements of the line hierarchy are considered organic to the

purpose of the organization. That is, these functional elements must

be contained in the body of the organization in some form. The defi-

nition of the organic nature of a function is an attribute of its re-

lationship to the primary service objective of the organization. In the

business manufacturing organization these organic functions are considered

to be production and distribution. In the case of the hospital organi-

zation with the primary service objective of care and treatment of the

sick and injured the organic functions would be such care and treatment.

Those facilities directly involved in care and treatment, such as the

nursing service and the ancillary services, would be a portion of the
chain-of-command. The complete removal of any one of these functions

from the hospital organization would mean the failure of satisfaction of

this objective although the'function may be undifferentiated and con-

tained within another unit at some particular point in time.

3William McNair Fox, The Management Process (Homewood, Ill.: Richard
D. Irwin, Inc., 1963), p. 77.

4While this is not a complete list the ancillary services include
laboratories, x-ray, physiotherapy, occupational therapy, surgery, etc.
Note, that by definition of organic functions this would not include
such accepted hospital units as central supply and pharmacy which are
auxilliary to the primary service objective of care and treatment.

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,-ys,;s n:, :w a c 'ro, of disn .e ,.: aso vr:.s alnernt, :ve mthads in

returning his patient to health--in the respect that a hospital is a

sub-function directly employed in the cure of disease but not alone

capable of performing this function, it is an organic element of the

health care system. However, it must be emphasized that it is the

physician who has the primary objective of cure while the hospital has

but an element of this objective in its charge--care and treatment of

the patient under the physician's charge.

This point is quite straightforward and accepted when the process

of organizational analysis is performed. It only becomes confused when

the elements of the health care system are studied in their individual

parts and synthesis from this level upward is attempted. Any study of

the scope of facilities provided in the modern hospital would conclude

that the range of care and treatment feasible is quite extensive, how-

ever, the actual contribution of the hospital organization to the system

objective of cure and prevention of disease is limited by the nature of

the system and its connection of interrelated parts. This is not meant

in any way to disparage the contribution of the hospital to the overall

system of health care, but is directed toward an appreciation of the

basis upon which many studies of hospital organization have been made

and the results which have been reported.5

To argue that the hospital is anomalous in regard to the structure

observations such as reported by Basil S. Georgopoulos, in "The
Hospital System and Nursing: Some Basic Problems and Issues," Nursing
Forum, V (1966), 8-35, that the hospital exercises more control over
nurses than doctors, lose much of their import when analysis rather than
synthesis is employed in organizational study.

of the health care system is to take a position in regard to alterna-

tive methods of delivering health care to society. Many of these same

arguments could be made in regard to the "feeder" plants of industry

which play their part in the production and delivery of goods to society

in a similarly complex manner. To provide that these plants ought to be

integrated with the companies which they serve is merely to observe that

alternative methods of providing for the needs and wants of society are

feasible. The actual choice among alternative methods must be based

upon principles of selection which go beyond the relative complexity

of an existing system. Although complexity of structure is acknowledged

to have its attendant costs, simplicity of structure gives no assurance

of being less expensive. Each must be evaluated in terms of the ob-

jective to be served rather than on the basis of ease of comprehension.

The points of duplication within the health care system which are com-

mented upon by the Somers are undoubtedly valid, and the gaps which

exist in the system are well known; however, the remedy to these dis-

crepancies, including the comprehensive planning system suggested by

these authors, may well remain an unacceptable, and therefore an unevalu-

ated, alternative.

In describing the line organization which exists in the voluntary

general hospital and its relationship to the primary service objective

Herman Miles Somers and Anne Ramsay Somers, Medicare and the Hospi-
tals: Issues and Prospects (Washington, D.C.: The Brookings Institute,
1So7), pp. 51-55.

7 bid.

of the organization the following chain-of-command can be described.

The upermost level in this chain is the board of trustees, the final

internal authority in regard to the purpose established for the hospital

organization and the link with the ownership maintained by the community.

One of the most important functions of the board, as in any corporation,

is the selection of the operating executive. It is in this act of desig-

nating the head of the organization that the first devolution of line

authority is accomplished, and the initial link in the primary chain-of-

command is created. The functions of the administrator of the hospital

as the operating executive are those responsibilities designated by the

board of trustees. The process of selection of the hospital admini-

strator and the delegation of authority to this executive have been well

discussed and do not require extensive comment at this point. An inter-

esting discussion of the characteristics of these operating executives

is provided by Etzioni, who identifies three types of hospital admini-

strators. These he classifies as the physician-administrator; the semi-

expert administrator, who may be a physician with administrative train-

ing or a trained hospital administrator; and, the lay administrator, who

is neither a physician nor a professional hospital administrator, but a

person with management training or experience in another field.10

Raymond P. Sloan, in Today's Hospital (New York: Harper and Row,
Publishers, 1966), pp. 119-139, provides an excellent description of
these processes.

Amitai Etzioni, "Authority Structure and Organizational Effective-
ness, Administrative Sciences Quarterly, IV (June, 1959), 53-59.

10 bid.

Etzioni's position in regard to the relative effectiveness of each of

these types of operating executives will be considered later as the

major propositions in regard to the anomalies of hospital organization

are treated in some detail.

Directly under the hospital administrator the line of the hospital

organization devolves upon the nursing and ancillary services. As

mentioned before the chain within these organic elements is described

in terms of departments, wards or units, and teams or stations, down to

the primary operative performers. There may be an intervening level

between the administrator and the head of the nursing or ancillary depart-

ment designated as associate or assistant administrator, but this level

of the hierarchy will be discussed below as a separate topic.

The director of nursing and the ancillary department heads derive

their authority from the hospital administrator and assume responsi-

bility to this official for the accomplishment of their assigned duties.1

The use of the term director of nursing services connotes the often

found grouping of both line and staff elements at the department level

beneath a single superior responsible for this major component of the

organizational activities. Examples of such arrangements would be the

grouping of various wards under departmental service classifications

such as medical, surgical, and pediatrics, along with the line element

of surgery and the staff element of central surgical supply all in a

M1Malcolm T. MacEachern, Hospital Organization and Manaqement
(Berwyn, Ill.: Physicians' Record Company, 1962), p. 518.

direct chain of responsibility to the director of nursing. These sepa-

rations of elements reflect a differentiation of the tasks to be per-

formed based upon product in the case of the medical specialty wards

and the process to be facilitated in the case of surgery. This basis

for differentiation of the organic function is typically found in the

universal structure along with other possible methods described by


There seems to be no question of the identification of the nursing

function as an organic element of the hospital organization. Wilson

provides that the nurse is the full-time symbol of the atmosphere of

the organization--that is, care and treatment.13 He also emphasizes

this identification by noting that the nurse is, in effect, the day-to-

day decision maker in regard to the functions carried out in the organi-
zation. Georgopoulos comments that the nurses comprise the only group

in the hospital that is always present at the center of work and the

major group through which the organization can insure continuity of work

12Davis, p. 343, provides for elemental differentiation by: product,
commodity, or service; process or method; equipment or other dominant
physical factors; and, physical dispersion of activities on some geographi-
cal basis. Each of these bases, in addition to the fundamental functional
differentiation, are represented in hospital organization at the various
levels of the line. Even geographical differentiation occurs in respect
to wing arrangements on the hospital wards which facilitate a logical
separation of areas which are too large for primary supervision.

3Robert N. Wilson, "The Social Structure of a General Hospital,"
Annals of the American Academy of Political and Social Science, No. 346
(March, 1963), p. 67.

1 Ibid., p. 72.

over time. The nursing service is described by Brown as the right arm

of the hospital administrator in the carrying out of the vital functions

of the organization. And, if the subtle point often referred to in

the management literature as an identification of the line is employed,

it is discovered that the nurse is the initiator of action in the hospital


At the operative level of the line nursing organization there appear

two basic forms within which the segmentation of tasks takes place.

These two forms are case assignment and a specialization of work in some

functionalized manner. Brown remarks on the extensive degree of speciali-

zation and task functionalization which has taken place in the hospital

organization and which has produced an extended line chain-of-command
below the registered nurse.8 Christman and Jelinek suggest that this

specialization has been wasteful of nursing personnel and recommend a

shortening of the chain-of-command to put registered and practical nurses

back in direct contact with the patient.9 The benefits and disadvantages

involved in extended chains-of-command with extensive specialization of

15Georgopoulos, p. 14.

6Esther Lucile Brown, Newer Dimensions of Patient Care: Part 2; Im-
proving Staff Motivation and Competence in the General Hospital (New York:
Russell Sage Foundation, 1962), p. 61.

7Eleanor C. Lambertson, in "Reorganize Nursing to Re-Emphasize Care,"
Modern Hospital, CVIII (January, 1967), 68, remarks: "Since the patient
is housed in a unit supervised by the nursing department, the therapeutic
and institutional services are generally initiated, coordinated, facili-
tated or referred by the nurse in charge."
8Brown, p. 63.
1Luther P. Christman and Richard C. Jelinek, "Old Patterns Waste
Half the Nursing Hours," Modern Hospital, CVIII (January, 1967), 78.

the primary operative functions versus shortened chains with tasks more

enlarged and generalized are discussed by Georgopoulos in a manner famil-

iar to the management student concerned with the operation of business
enterprises. These matters will be discussed more fully in their re-

lationship to the prototype characteristics of the hospital organization

and have only been mentioned at this point to illustrate the extension

of the primary chain-of-command in the hospital situation.

The ancillary departments of the hospital organization are similar

to the nursing departments in their extension of the line of command to

primary operative specialization. In large part these departments are

differentiated one from another on the basis of process or method employed

in satisfaction of their contribution to the primary service objective.

The purely therapy departments are a process specialization of the

organic function of treatment while the laboratories and x-ray have a

functional differentiation between diagnosis and treatment beneath the

department level. A brief listing of these ancillary functions and their
organization arrangement is provided by Brown.1

The designation of associate and assistant administrators along with

assistants-to the administrator has become more and more popular in

hospital organizations. The classification of these officers in regard

to their relationship to the line organization is as varied as are the

functions which are assigned to these positions. In many cases, when

20Georgopoulos, p. 26.

Brown, pp. 56-60.

they are subjected to analysis, these designations are only substitute

titles for departmental positions which are inherent in the organization.

In other cases it would appear that minor service levels are being de-

veloped which are separate from the major service levels discussed

above.22 Under these circumstances the minor service level created under

the position of the administrator would be considered to provide no basic

differentiation of the task of administration in spite of the desig-

nation which is assigned to the position. The relationship between the

administrator as the operating executive of the organization and the

functionally or process differentiated department head remains

essentially undisturbed if the line is to remain intact.

A particularly favorite assistant designating mechanism at the

present time is to group the various operating departments into the

classification of professional and administrative (or business). In

respect to the observation that these are artificial classifications

without organic meaning beyond an approximate separation of primary and

secondary/collateral objectives of the organization they must be con-

sidered as staff positions to the administrator, as outlined by Litterer.23

In many cases the staff nature of these roles is borne out by the quali-

fications of the incumbents, those recruited for these positions being

Davis, pp. 352-353, declares that major service levels represent
broad, basic differences in the kind of service, either operative or
executive, that is required by an organization. The levels and grades
within a major service level are designated as minor service levels.
23Joseph A. Litterer, The Analysis of Organizations (New York: John
Wiley and Sons, Inc., 1965), pp. 340-342.

largely recent graduates of programs in hospital administration with

generalized training rather than a specialized background in the func-

tions which appear to have been subordinated to these positions. This

is not to say that such staff roles will not facilitate the training of

these individuals for greater responsibility.

Another variation on this same approach of interposing an executive

level between the administrator and the operating department heads is

discussed by Davis as the development of a "fractional" service level.24

In essence this provides for the designation of a department head as

assistant to the administrator to allow for a staff relationship between

the specialist and the administrator in addition to the primary relation-

ship which already exists. Again, any line connotation which is implied

by this arrangement is at best artificial, and it should not be expected

to solve the operating problems which called the arrangement into being.

The designation of an associate administrator is perhaps representa-

tive of a line accommodation in the structure of the primary chain of

command, when such designation is in the singular. An associate adminis-

trator interposed between the administrator and the operating department

heads provides for an often necessary separation between the internal

and external duties of an administrator. In these cases the associate

administrator becomes the operating executive, responsible to the adminis-

trator for all internal matters including the coordination of the func-

tions assigned to the department heads.25

2Davis, p. 362.

25Ibid., pp. 361-363.

The role of the physician in the hospital structure is most ambig-

uous and remains an issue in every discussion of hospital organization.

This position of the physician in the hospital can only be understood

by reflecting upon the historical perspective provided by the health care

system in this country. Bloom discusses this perspective in terms of the

developing role which the hospital has played in the system in response

to the changing needs and goals of society.2 From a refuge for the

pauper and the friendless, the hospital has evolved into a center con-

taining the complex tools of medicine provided by an advanced technology.27

However, the physician has retained his independence from this structure
which provides the wherewithal for the practice of his craft.28 Bloom

believes that this historic fact may be lost sight of as a blending of

the duties of the profession with the mission of the hospital becomes

more pronounced.2

This same evolution of the role of the hospital is traced by Freid-

son, who notes that the impetus for this changing role was the physician

rather than the lay clientele.30 The conscious demand for these new

facilities stemmed from the physician rather than the client who had

2Samuel W. Bloom, The Doctor and His Patient (New York: The Free
Press, 1963), pp. 145-147.

271bid. 28Ibid. 291bid.

3Eliot Freidson, "Client Control and Medical Practice," Medical Care:
Readings in the Sociology of Medical Institutions, eds. W. Richard Scott
and Edmund Volkart (New York: John Wiley and Sons, Inc., 1966), p. 448.

these new services imposed upon him. Freidson believes that it is

questionable to designate the patient as the customer of the hospital

for under these circumstances the layman, while he pays for the services,
has little control over their use.32 Wilson views the physician as

having been the guest of the hospital with very special prerogatives

that allowed him to dominate many aspects of the situation which usually
are reserved to the owners. This same point is taken by Bloom, who

regards this phenomenon as a result of the potency of the physician's role

in the healing process, although his dependence upon the facilities pro-

vided by the hospital and the increasing competence of the nurse have

served to balance the effect of the physician's apparently dominating

influence as a guest.34

These authorities, however, see the evolutionary process as incom-

plete. Bloom views the physician's interests as blending with those of

the hospital thus leading to a new sense of ownership and responsibility
on the part of the doctor. Guzzardi believes that changing circum-

stances make a broader responsibility on the part of the physician in-

evitable. Rayack sees the physician as increasingly becoming an

311bid. 32Ibid.

3Robert N. Wilson, "The Physician's Changing Hospital Role," Human
Organization, XVIII (Winter, 1959-60), 177.

34Bloom, p. 147.

Ibid., p. 153.

6Walter Guzzardi, Jr., "What the Doctor Can't Order--but You Can,"
Medical Care: Readings in the Sociology of Medical Institutions, eds.
W. Richard Scott and Edmund H. Volkart (New York: John Wiley and Sons,
Inc., 1966), p. 541.

organization man dependent upon a host of institutions to perform his

work and through this process losing his traditional independence of

responsibility for the management of these institutions. However,

these comments are essentially speculation as to what the future holds

for organized medicine and the health care system. Of immediate im-

portance in defining the line of the hospital organization is the determi-

nation of the present role, if any, of the physician in this structure.

One prevalent approach to the role of the physician is obtained by

enlarging the scope of the hospital primary service objective to include

the accomplished healing of the patient. If this approach is taken the

place of the physician becomes quite ambiguous if it is maintained that

he is not a member of the organization. MacEachern appears to straddle

the fence in this regard, maintaining that the hospital's mission is

healing but then not adequately relating the physician to the process of

organization involved, and finally providing for the delegation of

authority to the nebulous "medical staff" and allowing for certain

parallel line authority. C. Wright Mills allows that this ambiguity

of roles describes a new entrepreneur attached to but not a part of the

hospital.39 And, Sloan, who also maintains that the hospital must have

3Elton Rayack Professional Power and American Medicine: The Econom-
ics of the American Medical Association (Cleveland, Ohio: The World Pub-
lishing Co., 1967), pp. 39-40.

38MacEachern, pp. 157-158.

3C. Wright Mills, White Collar: The American Middle Class (New
York: Oxford University Press, 1956), p. 116.

some finality to its purpose beyond a mere contribution to the well-being

of society, provides a unique role for the physician which defies

description as employee or consultant but may perhaps be categorized as
an independent contractor. In each case the conundrum is provided by

the expanded primary service objective awarded to the hospital organi-


From the legal point of view the position of the physician in the

hospital has been quite clear in maintaining an essential customer-enter-

prise relationship. MacEachern appears to recognize this by noting that

the law does not require a corporation to furnish its services to every-
one who applies. The courts have followed a quite consistent position

in this regard by maintaining the right of the private hospital organi-
zation to select those persons who will be welcome to use it facilities.4

This customer relationship of the physician to the hospital is reinforced

by the substantive rights to practice awarded to the physician by the
courts when the hospital is owned by the public. This continuing trend

toward a customer interpretation is reinforced by even more recent

4 Sloan, p. 11.

4MacEachern, p. 162.

42John F. Horty, Nathan Hershey, Eric W. Springer, and Donald M.
Stocks, Student's Guide to Hospital Law (2nd Edition; Pittsburgh, Pa.:
Health Law Center, Graduate School of Public Health, University of
Pittsburgh, 1962), p. 138.


decisions of the courts.

But, perhaps, the most telling argument for the customer role of

the physician is provided by the attitude of the doctors themselves.

As Bloom notes, the physician traditionally does not take responsibility

for the organization and management, which are the essential line func-
tions of the hospital.45 And MacEachern's dictum that the board should

pass the responsibilities for the treatment and care prescribed within

the hospital to the practicing physicians appears less as a line dele-

gation and more like a recognition of a fait accompli, for the physician
can have it no other way. However, the large degree of power which

the doctor wields within the hospital organization, and which is well
noted, cannot be denied.47

Undoubtedly the most popular view taken of the hospital by the

physician is to regard these facilities as his "workshop," a place where

he can obtain extra care for his patients and receive a combined consul-

tation beyond that which he could obtain by referring his patient to a

specialist. This concept of the hospital as a tool of the physician

Arthur H. Bernstein, "Medical Staff Appointments, Pro and Con,"
Hospitals, ILII (May, 1968), 99.

4Bloom, p. 150.

46MacEachern, p. 158.
Oswald Hall, "Some Problems in the Provision of Medical Services,"
Canadian Journal of Economics and Political Science, XX (1954), 461.
Albert F. Wessen, "Hospital Ideology and Communication between
Ward Personnel," Patients, Physicans and Illness, ed. E. Gartly Jaco
(New York: The Free Press, 1958), p. 461.

which maintains the essential customer relationship between the two is

noted by Perrow, who believes that the physician will use that hospital
which provides the best facilities for the care of the patient. The

administrator's duties as the operating line executive, as outlined by

MacEachern, is the provision of those facilities necessary to the

physician for the proper treatment of patients; this statement is perhaps

as complete a summary of the function and purpose of the hospital organi-
zation as can be made. While no comparisons are attempted, Etzioni

implies that this arrangement is not dissimilar from that which exists

in other segments of the service industry.51

This independence of the physician from internal responsibility and

management of the hospital appears to be a unique American approach to
the organization of health care.5 Although Wilson believes this to be

a passing phenomenon he agrees that what the American physician has had

was a workshop designed for his convenience. This aura of convenience

appears to have been dictated by the physician's definition of his own

4Charles Perrow, "Organizational Prestige: Some Functions and Dys-
functions," Medical Care: Readings in the Sociology of Medical Institutions,
eds. W. Richard Scott and Edmund H. Volkart (New York: John Wiley and Sons,
Inc., 1966), p. 563.

50MacEachern, p. 102.

51Amitai Etzioni, Modern Oranizations (Englewood Cliffs, N.J.: Pren-
tice-Hall, Inc., 1964), p. 78.

52Roul Tunley, The American Health Scandal (New York: Dell Publishing
Co., 1966).

53Wilson, "The Physician's Changing Hospital Role," p. 178.

role and the support he expected to be provided by the hospital.5

Tunley, for one, believes that this peculiar arrangement of free pas-

sage in and out of the hospital organization by the physician without

responsibility to the organization being exacted, is part of what he

describes as the scandal of American health care when it is compared

with the system in operation in other countries.5 Georgopoulos, how-

ever, believes that this concept of the hospital providing a doctor's
workshop is gradually passing from the scene; while Wilson indicates

that the physician is undergoing a shift from his older charismatic

role in the hospital setting to a more nearly bureaucratic niche within

the structure.57 However much the present situation of the physician's

role within the hospital organization is deplored, it still remains

descriptive to provide that the doctor is not typically of the hospital,

but, instead, is a customer of these facilities provided by the community

for his use.

This transition of the hospital to a position as a major segment

of the health care system with its employment as a facility for the use

of the physician appears to have placed the patient himself in an un-

defined role in regard to the hospital. Undoubtedly the immediate impact

54Hall, p. 460.


6Basil S. Georgopoulos, "Hospital Organization and Administration:
Prospects and Perspectives," Hospital Administration, IX (Summer, 1964),

7Wilson, "The Social Structure of a General Hospital," p. 67.

upon the patient is the loosening of the ties which traditionally held

between the physician and the person who sought his care. Simmons and

Wolff note that while the physician profits from the specific economies

and conveniences of the workshop his patient experiences a widening of

the social distance between himself and the person with which he has
contracted for care. The patient has undoubtedly taken second place

in this present arrangement although most people believe that the hospi-

tals exist primarily for the benefit of the sick person.59 Flores main-

tains that while it is true that the patients are the recipients of

whatever care is provided the hospital really exists to make it possible

for the physician to practice medicine in the most effective manner pro-

vided by that science.6 Wilson has remarked that the two most important

actors in the hospital plot, the physician and the patient, are both only
guests on the scene.

While Blau provides that there is a marked difference between the

customer of a business enterprise and that of a customer of a service

industry it is still difficult to ascribe a customer role to the patient

in the hospital. The patient finds that his life is ruled in both

58Leo W. Simmons and Harold G. Wolff, "Hospital Practice in Social
Science Perspective," Medical Care: Readings in the Sociology of Medical
Institutions, eds. W. Richard Scott and Edmund H. Volkart (New York:
John Wiley and Sons, Inc., 1966), p. 477.

59Florence Flores, "Role of the Graduate Nurse Today," The New
England Journal of Medicine, CCLXII (September 6, 1962), 487-491.

6Wilson, "The Social Structure of a General Hospital," p. 70.

Peter M. Blau and W. Richard Scott, Formal Orqanizations (San Fran-
cisco: Chandler Publishing Co., 1962), p. 59.

minor and major detail in the hospital by total strangers. Simmons

and Wolff observe that:

In the hospital the patient is "admitted" and "discharged" and
all the visitors are under rules, while at home the physician
is "on call" and can be "changed," and the nurse is "hired" and
can be "fired." In the home "prescriptions" are requested and
filled out, but in the hospital "orders" are written and must
be enforced.64

As Parsons has noted, a customer relationship can only exist when there

is some shared basis of knowledge between the customer and the party
being dealt with. While Parsons attributes some special relationship

between the patient and the physician, it is difficult to see any basis

for bridging the gulf which exists between the patient and the hospital.

Perrow remarks that this communications gap renders the patient in-

capable of judging the care which is rendered or interpreting the

hospital experience in its totality. If the patient is to be con-

sidered as a customer of the hospital organization then his knowledge

of the service received can only extend to the most superficial aspects

of the institutional care provided, which is unlikely to compare

favorably with the size of the bill which is tendered.6

6Simmons and Wolff, pp. 482-483.

6 Ibid., pp. 483-484.

6Talcott Parsons, The Social System (New York: The Free Press,
1951), p. 441.

66Perrow, "Organizational Prestige," p. 563.


To argue that both the physician and the patient are the customers

of the hospital would be to deny the basic orientation of the various

hospital personnel to the demands levied against the organization by the
doctor in attendance. On the other hand to maintain that the patient

is the customer while the physician acts as a control agent in the

customer's activities within the organization, as Etzioni argues, is

to reduce the role of customer to the perfunctory paying of bills which

is hardly the economic function implied in the term--customer. This

conception of the role of the patient also provides little in the way of

significance for organizational analysis. Perhaps the best analysis of

the part which the patient plays in the hospital organization is pro-

vided by Wessen.7 He maintains that:

.the patients are not so much a part of their social system
[the members of the hospital organization] as a vital reference
group in the midst of which the personnel operate, which they
serve, and toward which they orient many of their actions and

If it were not for the human quality involved it would be quite easy to

6Donald M. Rosenberger, in "A New Look at Hospital Organizations,"
Hospitals, XXXVI (February, 1962), 43, considers the various cate-
gories within which the physician and patient could be placed in regard
to the hospital organization and arrives at the conclusion that both are

6Amitai Etzioni, "Administration and the Consumer," Administrative
Sciences Quarterly, III (September, 1958), 253.

70Wessen, p. 253.


equate this statement to the orientation of the worker in industry to-

ward the raw material of production and the product in its various

stages of completion. Such of course is not entirely the case; however,

in spite of the special characteristics involved, the orientation of

management, in its control over the worker in the production process and

the emphasis placed upon the primary service objective, will be much the

same in both the hospital and the manufacturing concern.

There can be no doubt that a profound change occurs in the indi-

vidual when he assumes the sick role in American society, particularly

when this role involves hospitalization. Freidson has described this

role in terms of an hour-glass description of society with the waist of

the figure denoting a point where the patient passes from his normal
reference group to a new role with the health care system.7 Freidson's

essay is mainly concerned with the passing of the patient from his

physician, by consultation, to a specialist as providing the waist of

the two systems.73 At this point the patient no longer controls the

relationships which exist; he is then the object of the process involved
no matter how humane the considerations which are provided. In like

manner it can be recognized that the patient's role in the hospital

organization is as a portion of the process which the structure has been

72Eliot Freidson, "Specialties Without Roots: The Utilization of
New Services," Medical Care: Readings in the Sociology of Medical Insti-
tutions, eds. W. Richard Scott and Edmund H. Volkart (New York: John
Wiley and Sons, Inc., 1966), pp. 455-457.

73bid. 74 bid.

designed to facilitate. To maintain a customer orientation for the

patient would be a futile exercise in semantics.

It is in these two unusual roles, the patient and the physician,

that we discover the root of the discrepancy of description between the

hospital and the universal organization. The only present parallels

that can be cited between the role of the patient as the article in

process and situations of a like nature in organizations which are de-

scribed to be of the universal character would involve children being

processed under the customer oriented direction of a parent. In each

case where the party in process is an adult with the ordinary customer

control exercised by an authorized agent the anomalous nature of the

organization is cited, although this particular arrangement has little,

if any, structural connotation to the internal organization. The

problem undoubtedly does not rest with the human characteristics of the

client, but, rather, with professional characteristics of the agent.

This point must be amplified for it is here that the confusion arises

which appears to attribute an internal, line role to the agent rather

than the customer role outlined above.

The power of the physician to affect the internal workings of the

hospital organization is not the authority provided by organization

theory to internal membership. Rosenberger has described the physician

as not only a customer and a beneficiary of the hospital organization

but also as an informal partner in an informal joint venture;75 while

75Rosenberger, pp. 43-44.

Gordon detects a negotiated relationship based upon a power and control
relationship that is constantly being subjected to renegotiation. The

root of this power or informal authority as it is variously described

can be considered to rest in the prestige associated with the medical

profession as it applies in the peculiar hospital situation. Brown sees

the basis for the part which this occupational prestige plays as residing

in the evolutionary development of medicine and the health services which

allowed the physician to precede the other professional groups in their

development as the primary guardian of health.77 In addition to this

longer tradition the physician is favored by longer periods of training

and study, legal precedent, and a particularly fortunate socio-economic
position. Brown remarks: "As a consequence of all these factors,

physicians have had and continue to have the greatest authority, the

highest status, and the largest prestige of any group within the hospi-

tal." Significantly, Wessen notes that this respect for the doctor's

prestige is systematically indoctrinated in hospital personnel, and it

finds its greatest strength among those second in prestige--the nurses.8

Even the advent of "team medicine" has not loosened the physician's

prestigious position.8

P6aul J. Gordon, "The Top Management Triangle in Voluntary Hospi-
tals (II)," Academy of Management Journal, V (April, 1962), 72.

7Brown, p. 66.

781bid. 79bid.

80Wessen, p. 454.

Bloom, p. 167.

But, as some authorities have noted, this power which stems from

the charismatic prestige of the physician cannot be solely explained

by the factors considered above; it appears also to be a function of

the autonomous role which the physician plays in his association with

the hospital organization.82 The physician's autonomy has been laden

with the power, expressed as both explicit and implicit authority, to

direct the course of the organization.83 While the other professional

groups associated with the enterprise do not hold the same degree of

prestige as the physician their seeming inability to influence hospital

policy appears to be more a function of their internal membership in

the organization.84

The possibility of a misinterpretation of the role of the physician

as the presiding figure in the healing process to include the concept

that he is of the organization, rather than the customer, can have its

disastrous effects upon the management of the institution. Confusion

in regard to the objective of the hospital can lead to the executive

of the organization being held accountable for results over which he

holds no effective decision-making authority.8 If the description,

held by many, of the physician as an internal member of the organi-

zation, were correct, then the right to command held by the administrator

82Wilson, p. 177.

8 bid.

84Wessen, p. 463.

8 Davis, p. 17.

would not exist and his position would disappear. The situation

would be as Gordon has described it, where on a day-to-day basis the

corporation and its executives have no legal or organizational means
to control the service which the hospital has been set up to render.

Rather, it is from the surrounding organizations which make up the

environment of the hospital that the primary service objective of the
organization is determined. One of these organizations which is

primarily involved in the determination of the hospital's objectives

on a dynamic basis is the membership of practicing physicians--the

customers of the hospital organization. This process of interaction

involves the surrender of certain sovereignty on the part of both organi-

zations but it does not mean an incorporation of the two parties or a
modification of the structure for administration.

Much of the dilemma in regard to the position of the physician

in the structure of the general hospital has arisen from the nature

of the studies which have explored this issue. Those accounts which

subscribe an internal role to the physician have been largely socio-

logical in origin, but there also appears to have been considerable

feedback into management studies.90

86Koontz and O'Donnell, p. 66.

8Gordon, p. 72.

88Blau and Scott, pp. 196-197.

90The concern in hospital administrative literature with the issue
of finding a basis for management participation on the part of the privi-
leged physician is indicative of the dilemma arising when the doctor is

As Blau and Scott have remarked the objective of social science

studies is the explanation of various aspects of social organization

and the orderly structure of social life. This depends in the modern

lexicon, as Katz and Kahn describe it, upon the concept of open systems

studies which link the various subsystems, systems, and supersystems,

depending upon their degree of autonomy, into a total social system.92

The approach of open-systems theory is in contrast to traditional

organizational theories which tend to view the human organization as a

closed system and disregard the nature of organizational dependency on

its environment. Katz and Kahn believe that the traditional approach

awarded an undefined, internal role in the hospital organization. The
present suggestions, and practices, include the utilization of various
committee arrangements which practice remains essentially unevaluated
at this point. If organization theory were to suggest any resolution
of this contrived situation it would provide for complete incorporation
of the practicing physicians into the structure of the organization on
a salaried basis. There appears to be some trend in this direction with
a subsequent modification of the hospital primary service objective to
include the broader healing goal inherent in the work of the physician.
This aspect of the dynamics of the health care system toward a
centralization of the healing function is a major issue in American
medicine. Tradition and the ethics of the medical profession are
actively resistant to a modification of the present doctor-patient re-
lationship which would allow the suggestion of an authority superior to
that of the physician in the healing process. It could also be sug-
gested that the physician has little interest in the management responsi-
bilities associated with, internal membership. Much like American labor,
the physician sees little to gain in disturbing the favorable advantage
which he presently holds in the negotiated order of the system.

91Blau and Scott, p. 1.

92Daniel Katz and Robert L.Kahn, The Social Psychology of Organi-
zations (New York: John Wiley and Sons, Inc., 1966), p. 58.

93Ibid., p. 29.

has lead to an overconcentration on principles of internal functioning

of organizations which ignores the feedback from the environment which
is essential for organizational survival. This opening of the

boundaries of organizations has allowed the analyst to redefine the

structure of the organization and the nature of participation to serve

his particular purpose, which is accepted as his prerogative; however,

the user of these results must be on guard against employing a descrip-

tive analysis which is supported by a purpose at variance with that of
the user.9

The problem of the boundary to be enclosed in a particular study

is well recognized in open-systems theory. Blau and Scott refer to this

as the fundamental methodological dilemma in the study of social organi-
zations. Argyris, in establishing the boundaries for his studies

prescribes the philosophy of extending the boundary of the segment under

analysis to the extent that influences from the environment are neutral-

ized.97 Katz and Kahn describe the analytical problems, and the socio-

logical implications, involved in the concept of partial inclusion where


Litterer, pp. 6-9. The work of Amitai Etzioni, in A Comparative
Analysis of Complex Organizations (New York: The Free Press, 1961), pp.
18-21, is illustrative of the careful outlining of boundary positions in
the open-systems approach, here directed toward developing of compliance
structures. This outline should forewarn the management student of
indiscriminate adaptation of the conclusions derived to broader areas of

96Blau and Scott, p. 222.

97Chris Argyris, Integrating the Individual and the Organization
(New York: John Wiley and Sons, Inc., 1964), p. 122.

a participant is "of" two or more organizations at a boundary position.9

This is the dilemma of the salaried nurse and her professional associ-

ation, or the worker and his union, which creates competing cross-

pressures upon the individuals and the organizations.99 Sociological

literature would describe the physician as being in this dilemma of

partial inclusion in the hospital and in his profession; however, a

truer approximation of the situation when the doctor is a privileged

physician would be to describe his allegiance as solely to his profession.

If a sufficient isolation of the phenomenon of the physician as a

customer of the hospital organization is accomplished it is relatively

easy to describe a unique situation in light of the degree of control

exercised by the doctor in his transactions with the organization.1

The position of management literature in regard to the boundary

positions of organizations is well established. This issue was re-

opened by Barnard in his attempt to synthesize many of the concepts of

the informal organizational theorists with the traditional constructions

of management theory.0 He considered the concept of the customer as a

"member" of the organization to demonstrate the freedom of management

98Katz and Kahn, pp. 50-51.

9 bid.

P1aul J. Gordon, "The Top Management Triangle in Voluntary Hospi-
tals (I)," Academy of Management Journal, IV (December, 1961) 205.

0Chester I. Barnard, The Functions of the Executive (Cambridge,
Mass.: Harvard University Press, 1938).

theory from that of economics; however, his conclusions derived from

the theory of organization as a coordinative process was to exclude

the acts of consumers even though they were contemporaneous and closely

linked with many of the actions of management.102 His analysis had

demonstrated that the inclusion of "persons" as such in the structure

of organizations would unnecessarily limit the concept of "organization,"

and, therefore, it was more proper to consider them in the perspective

of their roles as determined by the structure itself.103 This point in

management theory is amplified by Davis in his reiteration of the term

"personnel" to include only those persons who have accepted an obli-
gation for the performance of certain assigned functions. Davis

also points out that those responsibilities are determined by the

characteristics of the values that must be created for the accomplish-

ment of the organizational objective.105 This definition of the bounda-

ries of the organization being prescribed by the goals of the organi-

zation is explicitly stated by Parsons, who notes that it is through

goals, not persons per se, that organizations are defined.l06

The specific purposes of the numerous sociological studies of the

hospital organization are varied. Much of the information provided can

be of interest to hospital managers if the purpose of the study is

102 bid., pp. 70-71. 1031bid., p. 72.

104Davis, pp. 15-16.


6Talcott Parsons, "Suggestions for a Sociological Approach to the
Theory of Organizations--I," Administrative Sciences Quarterly, I (Sep-
tember, 1956), 64-67.

understood as it provides insight into the total system of which the

hospital is a part. The cited study by Freidson provides considerable

understanding of the role which is played by the patient in the health

care process and should generate a more favorable perspective in deal-

ing with the patient on a day-to-day basis.107 Other reports which tend

to encourage the concept of the physician as a "team" member because of

his peripheral association with the hospital membership are unlikely to
provide reasonable guidance for the hospital manager. Still another

report suggests that the potential for a take-over of the hospital by

the physicians is apparent.109 Such concepts of the structure of the

hospital organization serve little purpose for the executives responsible

for the management of the organization and could actually be harmful to

the individual manager who attempted to exercise a measure of control
over the physician other than that normally associated with a customer.

The extent to which sociological studies can distort the structure

of organizations beyond the point where they can be of assistance to

management is exemplified by the normative compliance structure described
by Etzioni as representative of the hospital organization. He sees no

107Freidson, "Client Control," pp. 259-271.
108Bloom, pp. 160-161.

109Perrow, "The Analysis of Goals in Complex Organizations," p. 135.

110David B. Starkweather, in "The Classicists Revisited," Hospital
Administration, XII (Summer, 1967), 69-80, makes many of the same
comments in regard to sociologically based studies.

111Etzioni, Comparative Analysis, p. 21.

reason why privates should be included in the organizational structure

of the army when patients are not included as the lower level in the

hierarchy of the hospital.2 By so including the patients as members

of the hospital organization he is then able to demonstrate that they

comply through normative measures while other organizations including

those of an economic variety insure compliance of the lower levels of

the hierarchy by remunerative devices.3 It is through this simple

device of arbitrary boundaries that his comparative analysis derives

the conclusion that the business and hospital organization are dissimi-

lar. A similar position is taken by Bloom, who maintains that patients

are a part of the social structure where long-term illness is involved.ll4

Freidson, however, in his essay which suggests the hospital as a proto-

type organization, has taken exception to those studies which attempt

to include the patient as a member of the hospital organization.115

It is well accepted that sociological studies have their place in

management theory.6 Quite early in the development of this theory,

Barnard noted that the single explanation of organizational behavior pro-

vided by economic theory was insufficient by itself to provide the insight

necessary to explain the functioning of the executive.117 He utilized the

1121bid. 113 bid., p. 42.
Bloom, p. 161.
1Eliot Freidson, "Review Essay: Health Factories, The New Industri-
al Sociology," Social Problems, XIV (Spring, 1967), 495.
Koontz and O'Donnell, p. 32.

117Chester I. Barnard, Organization and Management (Cambridge, Mass.:
Harvard University Press, 1948), pp. 112-125.

method of varying the boundaries of the organization to gain broader

insight into the organizational process for management purposes.8

However, as Koontz and O'Donnell note, there are various organization
theories, each serving its own purpose. The organization theory re-

quired for management purposes must concern itself with the authority-

activity structure of an enterprise and the goal-seeking process which

takes place within this structure as well as with the problems of human

This extensive argument which has been presented in support of the

physician as the customer of the hospital organization rather than as

an internal member of the hierarchical structure has not been made at

the expense of those physicians who can by definition be included in

such membership. These are the salaried or contract physicians who

have internal roles in the organization and are of the line organi-

zation, usually at some management level in the structure. This cate-

gory of line physician would also include the residents in training and

the interns on more transient line assignments who are found in the

larger training hospitals. It is obvious that in these cases where

physicians are directly responsible for organic functions other than the

ancillary departments the primary service objective will more broadly

contain the healing assumption.

Blarnard, The Functions of the Executive, p. 69.

119Koontz and O'Donnell, p. 208.
120 bid.

It has been noted by a number of authorities that a tendency

appears to exist in American society toward greater internal membership

in the hospital organization by physicians. Guzzardi cites the Ford

Hospital in Detroit as providing a model of the organization with all
physicians on a salaried basis.21 He believes that as more new physi-

cians become accustomed to earning a salary from the hospital during

their training periods they will be less reluctant to continue the same
arrangement on a permanent basis. Gilb recognizes that this tendency

is already prevalent and notes that this raises new structural problems

for the hospital in light of the traditionally independent character of
the profession. She believes that the accommodation that will come

about may possibly resemble the position of the faculty in a university

In those hospital institutions which are fortunate enough to have

a complete staff of physicians, Brown notes, these doctors are responsi-

ble to the administrator for the areas which would otherwise by under

the jurisdiction of the nursing staff.125 However, it should be noted

that while these physicians are of the line, responsible to the head

operating executive, there is usually a medical director at an

121Guzzardi, p. 542.
1Corinne L. Gilb, Hidden Hierarchies (New York: Harper and Row
Publishers, 1966), p. 102.
125Brown, p. 62.
Brown, p. 62.

intervening level with considerable decentralized authority for the

purely medical functions, much as the nursing director intervenes in

the typical organization with an appreciable degree of decentralized

authority. Again, while the tendency may be toward the fusing of the

hospital organization and the medical profession into a single struc-

ture, the more typical organization is not of this variety at present,

and, therefore, this variation will not be of major concern in this


The general hospital considered as a business organization serv-

ing a clientele may broadly be classified as a member of the amorphous

service industry. In various ways the hospital has unique characteris-

tics as a member of this industry. As Etzioni, and others, have noted

the hospital is one of a group of service organizations which can be
classified as predominated by professional participants. The con-

clusions reached by the authorities who make this observation, however,

are at variance with what has been presented in this paper. Etzioni

remarks that the intervention of the professional, as the operative

performer in the organization, between the service provided and the

consumer, allows for a separation of the consumption-control sequence

found in normal market operations.127 While this separation may be true

for the patient-physician relationship it is hardly so for that which

exists between the physician and the hospital when the physician is

2Etzioni, Comparative Analysis, p. 51.

127tzi Modern animations, p.
Etzioni, Modern Organizations, p. 97.

accepted as the customer of the hospital; the physician as consumer of

the services provided by the hospital is most knowledgeable of the

product being provided and has a large measure of control in the ex-

change process. Rosenberger's description of the relationship between

the physician as the customer and the nurse as the operative performer

in the hospital is quite clear on this point.128

In one other respect the hospital is unusual in the practices of

the service industries although, perhaps, not remarkably so. This is

in the control exercised by the organization over whom shall be allowed

to make themselves available to the services provided. The hospital

accepts a responsibility to the ownership of the facility that the

customers shall be qualified in the employment of the services provided.

This is essentially a further extension of society's concern with whom

shall be allowed to practice medicine and to what degree they are compe-

tent in various segments of the profession.129 If the physician's con-

trol in the exchange process is said to be balanced by control exer-

cised by the organization it would be in respect to this initial selec-

tion of those physicians who will be granted privileges in the hospital.

This same selection process is exercised by any business organization

but on a much less formal basis, and like the business organization,

the hospital has the right to terminate the relationship as specified in

the contractual agreement.

128Rosenberger, p. 44.

129Freidson, Review Essay,' p. 493.
Freidson, "Review Essay,'.' p. 493.

As in the other service industries the operative performers of the

hospital organization come into close contact with the customers; as a

consequence the customer is able to direct or attempt to direct the

worker at his tasks.1 In fact, as Parsons expresses it, this is a

prerequisite for the service classification.1 MacEachern details this

customer control in the hospital as a function of medical authority, al-

though the word authority has a special meaning in organizational termi-

nology and might better be expressed as a control relationship.132

Woodward notes the interconnection between the service and production

industries in the unit-production case where the desires of the customer

largely provide the immediate direction for the operative performers.133

The fine line of distinction between the service and production indus-

tries provided by a distribution function is obscured when this function

is a part of the production process as in the case of the hospital organi-


This relationship between the customer being served and the organi-

zation providing the service may be an important result of the prototype

130Howard S. Becker, "The Professional Dance Musician and His Audi-
ence," Professionalization, eds. Howard M. Vollmer and Donald L. Mills
(Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1966), pp. 212-213.

3Talcott Parsons, "Suggestions for a Sociological Approach to the
Theory of Organizations--I," Administrative Sciences Quarterly, I (Sep-
tember, 1956), 71.

132MacEachern, p. 528.

133Joan Woodward, Industrial Organization: Theory and Practice
(London: Oxford University Press, 1965), p. 158.

characteristics of the hospital organization, and it should be explored

further now that it is considered as a customer-organization relation-

ship rather than a phenomenon explained by informal authority. Perhaps

the most unusual aspect of the hospital as a representative of the

service industries concerned with unit-production is the extent to which

the physician as a customer interacts with participants throughout the
organization. While there are areas of the organization with which

he is not concerned the physician goes beyond what would be considered

as the normal points of entry for a customer. It could be said that

the physician traverses the organization both vertically and horizon-

tally to insure that each facet of the care and treatment being rendered

to his patient is to his specification. He is undoubtedly accepted as

the expert on how the care and treatment is to be provided and he in-

tends to insure that the specification is accomplished much as any

service customer who cannot rely on the control device of final rejection

of the product.135 The doctor is unwilling to accept the formal relation-

ship which might be prescribed by the organization to control his re-

lationship with the established structure. His frequent encounters with

the operative performers of the organization develop the semblance of an

informal relationship that may make many of his specifications of an

implied category.3 Many of these specifications both implied and

4Blau and Scott, p. 60.

135Freidson, "Review Essay," p. 497.

136Hall, p. 460.

explicit can be interpreted by either the physician or the operative

performer as emergency in nature. 37 Although the operative performers

who are in contact with the customer-physician are usually classified

as professionals they must hold their professional judgment in abeyance

when they are playing this complicated role, or they must learn to exer-

cise this judgment with a discretion developed through constant associ-
ation with the physician. But servicing the values of the customer

is but one part of the operative performer's tasks in the hospital

organization; in addition there are a variety of functions which are

responsive to the internal maintenance function of the organization.139

It has only been quite recently that nurses as operative performers in

the hospital organization have begun to define the internal aspects of

their role to any great extent, and it remains questionable as to what

the exact nature of this definition will be or to what extent this will
modify the physician-hospital relationship.4 If the "team nursing"

concept continues to be received with favor, the professional nurse in

her line supervisory role in the hospital organization will undoubtedly

reinforce her position as coordinator and system integrator through her

role as the intermediary between the organization and the physician much

1371bid., p. 462.

3Lyle Saunders, "The Changing Role of Nurses," Issues in Nursing,
ed. Bonnie Bullough and Vern Bullough (New York: Springer Publishing Co.,
Inc., 1966), p. 120.
1 Brown, p. 62.

140Flores, pp. 487-491.

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