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All hospitals have the opportunity to seek legitimacy from a variety of external normative sources. Some of these are more clearly focused on managerial procedures, some on technical procedures, and some pertain to both. Because managerial legitimacy is typically governed by different societal values (efficiency and cost-containment) than technical legitimacy (quality of patient care and specialty trainingamong health organizations), the types of procedures suggested by different normative sources need not be complementary and may even conflict with one another. In our em- pirical investigation, therefore, we consider seven different sources of normative legitimation, three focusing primarily on managerial aspects of hospital activities, three on technical, and one encompassing both.Hospital organizations improve their survival chances insofar as they are successful in obtaining legitimacy from such normative sources as the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO) or the American Hospital Association (AHA). More generally, a number of theorists (Meyer and Scott, 1983; Baum and Oliver, 1991) have argued that organizations operating in highly Institutionalized environments are more likely to survive to the extent that they are successful in obtaining legitimacy from those normative sources that are in a position to approve or disapprove their structures, staffing, and programs. While this proposition should hold true of normative legitimacy viewed in general terms, the particular salience of managerial and technical dimensions of legitimacy may vary depending on the nature of an organization's environment. To qualify the significance of these dimensions, we must consider some additional characteristics of institutionalized sectors.Institutional regimes and the varying salience of legitimation sources. Our study extends over almost fifty years, during which significant changes have occurred in both the nature of hospitals and their relation to their environments (Stevens, 1989; Burns, 1990). Between 1945 and the present, three general periods relevant to hospital organizations can be identified: (1) a period of professional dominance combined with localized controls (1945-1965), (2) a period of vastly increased federal involvement in both the funding and regulation of hospital care (1966-1982), and (3) a period of increased reliance on market mechanisms and on managed competition (1983-present). These periods are characterized by the salience of different types of institutional regimes (see Scott, Mendel, and Pollack, 1996)Early commentators emphasized the unique role played by physicians in establishing appropriate coordination and control mechanisms within the medical sector (e.q. Scott and Backman, 1990). This attitude is clearly exemplified by Freidson (1970: 77), who noted that "the most important single element in the social structure of medical care is the medical profession itself." The logic of this regime is one of professional dominance, Insofar as sector coordination is sustained mainly through the norms and interactions of a dominant profession. In the American healthcare field, professional dominance emerged in the early twentieth century after medical education and licensing standards began to be consolidated under the auspices of the AMA following the Flexner report (Starr, 1982), A related feature of this era was the decentralized nature of medical care organizations Through out the period, many hospitals-the major organized providers of medical services assumed a voluntary, nonprofit form and operated as independent organizations under localized community controls (Burns, 1990). Formal linkages that did exist among providers were typically limited to loosely coupled referral networks or affiliations with academic medical centers,By the mid-1960s, this regime was increasingly challenged by the encroachment of the federal government into medical affairs in particular, through the Medicare/Medicaid acts of 1965. Funding decisions became highly centralized, and a number of regulatory structures (e.g., for health planning and professional review) were put in place." In the San Francisco Bay area, the levels of federal and county expenditures for direct health services shifted in less than one year from being strongly in favor of local funding to favoring federal funding by a three to one ratio (USBHP, 1990). The resulting institutional regime was not only more centralized than the system of professional dominance, it also featured increased development of horizontal linkages among organizations in the sector. Many of these linkages, such as the Regional Medical Program networks, were encouraged by public agencies (May, 1967), but health providers also began to create more palpable connections in the form of multihospital systems (Ermann and Gabel, 1984). This increase was especially pronounced when one considers the timing of Medicare/Medicaid passage: in the brief period between 1965 and 1967, the proportion of Bay Area hospitals with system affiliations increased by 50 percent.
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