Hospital-physician relations under hospital prepayment

Fundamental changes now occurring in the field of health services may make it increasingly difficult to develop or maintain satisfactory hospital-physician relations. This paper examines the nature of hospital-physician relations following the introduction of an experimental hospital prepayment program that capped budgets in nine hospitals for a 5-year period. Results from longitudinal analyses based on data from key physicians, hospital administrators, and board members indicate generally positive "effects" on hospital-physician relations, except for increased strain in the system. In most respects, there were no adverse effects on the work relations of physicians, in the perceived quality of medical care, or in the institutional performance of physicians at the nine participating hospitals after the introduction of prepayment. Moreover, to some extent, the prepayment program appears to have been effective in controlling hospital costs and is perceived by the principal participants to have been successful.