Reference no: EM132584557

As all types of ambulatory services have grown in availability and consumer and insurer favor, hospitals have aggressively pursued development of these services to generate revenue and attract patients. Entrepreneurial physicians also have seized opportunities to operate facilities such as outpatient diagnostic and surgery centers, effectively putting them into competition with their affiliated hospitals for this profitable business.

At Hope Hill Hospital, the board of directors and administration are increasingly concerned that certain groups of their affiliated physicians are going into competition with the hospital for profitable ambulatory services. In the past two years, separated groups of ophthalmologists, obstetrician-gynecologists, gastroenterologists and orthopedists have each established freestanding ambulatory diagnostic and treatment centers that provide the same services as the hospital. The board and administration are particularly dismayed because in the past five years, the hospital made sizable capital investments to upgrade the facilities and equipment available to these physicians for the identical procedures they are now providing in their own facilities.

Some members of the hospital board assert that the hospital provides "rent-free workshops" for their affiliated physicians, putting all hospital facilities at their disposal (inpatient care, operating rooms, laboratories, other diagnostic services, emergency departments, etc.) and that physicians who draw away patients (and revenue) with competing services are at best disloyal, and at worst, unethical. Perhaps, these board members argue, physicians who choose to compete with their affiliated hospitals should be required to pay the hospital a "usage tax," for example, based upon the number of patients they admit, in order to retain their admitting privileges.

Develop a position for or against this physician entrepreneurialism. Provide supporting rationale for the position you adopt.