Hospital selection into multihospital systems. The effects of market, management, and mission

The growing literature on multihospital systems (MHS) has concentrated on assessing system performance without a concurrent examination of the assumptions related to the conditions under which hospitals and systems affiliate with each other. Using a net present-value framework the current study develops and tests a model that explains the entry patterns of hospitals into multihospital systems. Specifically, we assess the role of the hospital's market, management activity, and mission compatibility with the system as predisposing conditions of MHS affiliation. The model is tested on a sample of 306 affiliated and 918 nonaffiliated hospitals under conditions of market equilibrium and disequilibrium, and for hospital entry into both non-profit and investor-owned multihospital systems. Results suggest that the relative impact of market factors, hospital management characteristics, and mission compatibility on MHS entry will vary systematically as a function of assumptions about the hospital's market and the type of system with which the hospital affiliates.