Researchers, led by Jill A. Brown of Bentley University, in Waltham, Mass. talked to people at an unnamed nonprofit hospital in a competitive market for 15 months and combined their findings with archived material.
The hospital was transitioning to a nonprofit/for-profit structure, under which it shared ownership of for-profit facilities with physicians, in hopes of retaining physicians within the competitive environment.
As part of this transition, the hospital increased physician autonomy in managing activities and costs across hospital units.
That helped physician retention but it also boosted physicians’ bargaining power at the expense of the hospital’s, dramatically increasing replacement costs for physicians as they became part owners of shared facilities.
The process eventually canceled out the external competitive advantage that the new governance structure had given it, says the study.
The study’s authors wrote: “Our results show that human capital bargaining power is a ‘double-edged sword,’ shifting the governance structure to benefit those with power by providing additional rents, but creating challenges for the ongoing management and retention of such valuable human capital. Our findings have implications for the long-term survival of talent-intensive organizations where human capital bargaining power is strong.”