Association for Public Policy Analysis & Management

Physician-owned hospitals constitute approximately five percent of nearly 6500 hospitals nationwide in the US. Physician-owned hospitals have consistently outperformed other hospitals in terms of care and patient satisfaction as suggested by quarterly ratings published star ratings by the Center for Medicare and Medicaid Services. Yet provisions of Patient Protection and Affordable Care Act place severe restrictions on physician-owned hospitals. This raises several important questions about how physician-owned hospitals achieve and sustain such effectiveness in an unsupportive environment. This exploratory study sought a preliminary examination of the factors that make physician-owned hospitals relatively more effective at delivering care and how such care is institutionalized for a continuous superior performance despite the odds. The data were collected through interviews with hospital representatives in mid-Atlantic region, and websites of top performing physician-owned hospitals. The preliminary results indicate that physician ownership, accountability, communication, and adequacy of technology are critical elements in the effectiveness of the physician-owned hospitals. The preliminary results suggest that any theory of institutionalization of effectiveness in organizations must take into account the issues of legitimacy, identity, values, and control in the organization.