CEO must have authority to coordinate governance, management, medical staff.

As hospitals attempt to survive in today's new competitive environment, they will find that the traditional organizational structure does not work. This structure can be characterized as a three-legged stool. Governance, management, and medical staff existed in relative harmony, with each able to attend to its own distinct, separate responsibilities. The medical staff regulated itself, the governing board had no serious difficulties in coping with the institution's finances, and the CEO was concerned solely with the physical plant and hospital personnel. In a riskless economic environment, this three-legged stool could remain stable. In the coming years,however, a hospital will need a clear-cut, identifiable leader if it is to survive. To centralize authority primarily in the CEO's hands will be a difficult step for nonprofit hospitals, particularly those sponsored by religious institutions, because of their tradition of operating much as a charitable social agency rather than a business. But this step must be taken, even to the extent of naming the CEO as chairman of the board, for a leader is required who has the authority to make quick decisions in the competitive marketplace. Timeliness is of strategic importance in such an environment, and governing boards increasingly will find it impossible to make timely decisions on a collective basis. Moreover, CEOs will have to coordinate the activities of management, medical staff, and the governing board. They will need to play a strong role in ensuring that target levels in DRG costs are met, and they will need the authority to mediate in issues in which the hospital's economic interests are pitted against physicians'.(ABSTRACT TRUNCATED AT 250 WORDS)