The major challenge facing health care executives today is how to provide high-quality clinical quality, high levels of functional quality (i.e., patient satisfaction), and cost-effective patient care. All health care executives are caught in the middle of competing expectations and pressures from a large and evolving group of stakeholders in a hyper-competitive environment of scarce resources.

Stakeholder management theory was originally developed by R. Edward Freeman in the mid-1980s in his classic book titled Strategic Management: A Stakeholder Approach (complete citation for all books are in the reference section of the Malvey, Fottler, and Slovensky article in this FORUM). Later John Blair and Myron Fottler identified a large number of stakeholders for various types of health care organizations, classifying them into four categories (i.e., supportive, mixed-blessing, nonsupportive, and marginal) and proposed a generic process for managing these stakeholders in their book titled Challenges in Health Care Management: Strategic Perspective for Managing Key Stakeholders. The proposed process suggested involving supportive stakeholders, collaborating with mixed-blessing stakeholders, defending against nonsupportive stakeholders, and monitoring marginal stakeholders. Specific tactics for managing each of these strategies were also suggested with examples of each.

The question facing administrators today is how can we augment our existing theory empirically to verify what we think we already know, and then apply what we know to solve problems of health care executives in the real world? The three articles in this forum each take a distinctive perspective on this question.

In the first article, Mattia Gilmartin and Edward Freeman examine the linkage between business ethics and its application in the health care industry. They begin by asking whether or not the health care industry should be conceptualized as a business. One business model is "cowboy capitalization," which conceptualizes business as a competitive jungle resting on self-interest where business and ethics are separated. They note that a new understanding of business has emerged over the past 15 years, which rests business on a firm moral foundation, which requires all participants in the process to take responsibility for their actions. This new understanding may be labeled "stakeholder capitalism," "managing for stakeholders," or "stakeholder management."

The authors note that "stakeholder capitalism" does not separate business from ethical discourse, but rather admits that the best-run businesses often have "noble causes" or a "sense of purpose" that drive their ability to innovate and earn superior economic returns. They provide six principles for health care reform together with examples of both health care and non-health care organizations, which are focused on simultaneously meeting the needs of multiple stakeholders as they attempt to implement these principles. They conclude that, far from being the cause of the current malaise in health care, capitalism (understood as stakeholder capitalism), has not been given a real chance. We need more capitalism, not less.

In the second article, Donna Malvey, Myron Fottler, and Donna Slovensky identify a gap in the current strategic stakeholder management process literature, which they propose to fill. Specifically, they believe that the literature has not adequately addressed the issue of how health care executives might be evaluated in terms of their performance in managing their key internal and external stakeholders. To address this critical gap, the article proposes a systematic method for evaluating manager performance using a stakeholder report card.

The authors select physicians as the focal example and conceptualize them as interface stakeholders who manage other internal and external stakeholders. A process for evaluating the success of physicians in managing their stakeholders is proposed in detail including specific evaluation criteria and examples, which might be used. They conclude by proposing that health care organizations create (with physician input) a report card for documenting physician success in managing each of their internal and external stakeholders.

In the third and final article, James Hoffman, Kimberly Boal, and David Robinson examine the critical factors that determine the acquisition, retention, or divestiture of physician medical groups. They note that the merger activity among medical groups peaked from 1995-1997 and has declined significantly since then with many of the new partnerships described as "distressed marriages" headed toward divorce. This raises the question of why some mergers and acquisitions succeed while others fail. One possible answer is that postmerger problems may stem from poor stakeholder management because few health care organizations have a fully developed strategic approach for managing their key stakeholders.

The authors then propose a metaphor, which notes that stepfamilies and merged organizations face many of the same difficulties (i.e., high rates of failure, unrealistic beliefs, power issues, etc.) and tasks (i.e., establishing new relationships, new coalitions, and new traditions). In addition, stepfamilies and merged organizations share many of the same characteristics (i.e., complex structures, high stress levels, role ambiguity, and cultural shock). Based on these themes, four propositions are developed regarding factors that lead to physician group acquisition failure. These propositions are derived from a stepfamily theory developed by the authors related to heterogamy (i.e., dissimilarity), preexisting family problems, the remarriage market, and differing commitment perspectives. The authors conclude with recommendations to enhance the probability of merger success based upon both stepfamily theory and stakeholder management theory.

All three articles provide important new insights in the development of new theory as well as practical implications for health care executives and future research directions. While quite different in focus, all three provide excellent examples of how stakeholder management theory might be used to illuminate significant challenges in health care management. We would like to thank all of our contributors for deepening our understanding of these challenges and their potential solutions.