The Interactive Effect of Physician–Hospital Organization and External Environment on Patient Satisfaction

The unique characteristics of the health care industry have given rise to an intriguing and pervasive form of joint venture between hospitals and physicians known as physician–hospital organization (PHO). With transaction cost analysis as the overarching theory, the authors draw on practitioner insights and literature to reveal the advantages and disadvantages of PHOs and identify the boundary conditions under which PHOs are more likely to enhance patient satisfaction. They test the proposed model using multiyear panel data from 19,134 observations in the U.S. health care industry. The results underscore PHOs’ capability to enhance patient satisfaction with hospital services. The significant main effect grows stronger when the market is characterized by intense competition among hospitals, high mortality rates, urban settings, and high unemployment rates. The post hoc analysis reveals that PHOs can additionally improve patient recommendation of a hospital indirectly through patient satisfaction. This study contributes to research on governance structure and customer satisfaction by establishing a connection between PHO and patient satisfaction and identifying its boundary conditions. The findings highlight several fertile avenues for research.