Hospital medical staff committees, especially those involved in staff credentialing decisions, exist in a legal limbo. With the exception of some hospitals in small communities that are short of physicians, the members of a hospital’s medical staff are competitors. Thus, medical staff committees are groups of independent small businesspersons making decisions that affect the ability of other small businesspersons to compete with them. This is facilitated by a larger business, the hospital, that controls essential facilities, delegating critical management decisions to this group of independent contractors.

Hospital administration based on decision making by independent committees of physicians can be traced to the Joint Commission on the Accreditation of Healthcare Organizations (Joint Commission). The Joint Commission was originally a joint endeavor by the American Hospital Association (AHA) and the American College of Surgeons (ACS). The AHA wanted to professionalize the management of hospitals but needed the support of the physicians. The ACS could see the benefit in the professionalism of hospital management but did not want to concede to administrators the power to control the medical staff appointments process. Out of these needs and aspirations the Joint Commission was born. The surgeons agreed to support efforts to reform hospital management as long as the hospital administrators agreed not to interfere with the prerogatives of the medical staff. The result was an uneasy truce between administrators and physicians on the medical staff.

Because of its basic nature as a group of competitors conspiring to set the terms of the competition, the authority of a medical staff committee is legally suspect. This is the inverse of the prevailing opinion that medical staff committees are legally favored, except when they make biased decisions. It is important to understand the basis for turning this view on its head. If medical staff committees are legally favored unless they make biased decisions, then it should be relatively easy to establish criteria for making decisions that will avoid the biases that concern the courts. If, on the other hand, medical staff committees are inherently suspect, attempts to make their decisions legally supportable will result in ever more complicated rules and procedures, and these rules and procedures will be constantly under attack with the development of new legal theories. This has been the case, prompting the Congress to pass a law reducing legal attacks on peer review actions.