The ties that bind: an integrative framework of physician-hospital alignment

BACKGROUND: Alignment between physicians and hospitals is of major importance to the health care sector. Two distinct approaches to align the medical staff with the hospital have characterized previous research. The first approach, economic integration, is rooted in the economic literature, in which alignment is realized by financial means. The second approach, noneconomic integration, represents a sociological perspective emphasizing the cooperative nature of their relationship. DISCUSSION: Empirical studies and management theory (agency theory and social exchange theory) are used to increase holistic understanding of physician hospital alignment. On the one hand, noneconomic integration is identified as a means to realize a cooperative relationship. On the other hand, economic integration is studied as a way to align financial incentives. The framework is developed around two key antecedent factors which play an important role in aligning the medical staff. First, provider financial risk bearing is identified as a driving force towards closer integration. Second, organizational trust is believed to be important in explaining the causal relation between noneconomic and economic integration. SUMMARY: Hospital financial risk bearing creates a greater need for closer cooperation with the medical staff and alignment of financial incentives. Noneconomic integration lies at the very basis of alignment. It contributes directly to alignment through the norm of reciprocity and indirectly by building trust with the medical staff, laying the foundation for alignment of financial incentives.