THE ANOMALIES OF HOSPITAL
ORGANIZATION: THE IMPLICATIONS
ALAN DONALD BAUERSCHMIDT
A DISSERTATION PRESENTED TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF DOCTOR OF PHILOSOPHY
UNIVERSITY OF FLORIDA
I l ll lll 'l lil l illlill
3 1262 08552 2091
TABLE OF CONTENTS
1. INTRODUCTION........................................... I
II. ORGANIZATIONAL OBJECTIVES.. ........................... 33
Ill. THE LINE ORGANIZATION................................. 58
IV. THE STAFF ORGANIZATION................................. 103
V. AN ANOMALY: LINE IS STAFF AND STAFF IS LINE............ 123
VI. AN ANOMALY: TWO CHAINS OF COMMAND....................... 142
VII. AN ANOMALY: HOSPITALS ARE BECOMING MORE
BUREAUCRATIC IN STRUCTURE.......................... 158
VIII. THE PROTOTYPE ORGANIZATION.......................... .... 177
IX. TOWARD EUPSYCHIAN MANAGEMENT.......................... 229
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
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.
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
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,
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
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.
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.
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
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
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,
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
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.
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
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
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.
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
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.
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.
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.
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
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 ORGANIZATION
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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uals ,:.-.o a, ; ,c C .,-, .,,ys:c Z:.L. P /s, .-.s Z -z: a ., co .ce:.- .ec .-I
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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-
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.
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
Amitai Etzioni, "Authority Structure and Organizational Effective-
ness, Administrative Sciences Quarterly, IV (June, 1959), 53-59.
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
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
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
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
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
P6aul J. Gordon, "The Top Management Triangle in Voluntary Hospi-
tals (II)," Academy of Management Journal, V (April, 1962), 72.
7Brown, p. 66.
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 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.
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 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.
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.
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.