A theory of physician-hospital integration: contending institutional and market logics in the health care field.

This article proposes a theory of physician-hospital integration. The theory is developed by building on three streams of scholarship: "new" institutionalism, "old" institutionalism, and the theory of economic markets. The theory uses several key concepts from these theoretical frameworks, including the notions of environmental demands for legitimacy, market demands for efficiency, and agency. To enhance the predictive power of the theory, two new concepts are introduced: directionality of influence between institutional and market forces at the macro-societal level, and degree of separation of institutional and market domains at the local level--which add important predictive power to the theory. Using these concepts, a number of hypotheses are proposed regarding the ideal types of physician-hospital arrangements that are likely to emerge under different combinations of directionality of influence and institutional and market domain separation. Moreover, the theory generates hypotheses regarding organizational dynamics associated with physician-hospital integration, including the conditions associated with high and low prevalence of physician-hospital integration, the extent to which the integrated organization is physician-centric or hospital-centric, and whether physician-hospital integration is likely to be based on loose contractual arrangements or tight, ownership-based arrangements.