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New forms of payment, growing competition, the continued evolution of multiunit hospital systems, and associated forces are redefining the fundamental relationship between hospitals and physicians. As part of a larger theory of organizational response to the environment, the effects of these external forces on hospital-medical staff organization were examined using both cross-sectional data and data collected at two points in time. Findings suggest that regulation and competition, at least up to 1982, have had relatively little direct effect on hospital medical staff organization. Rather, changes in medical staff organization are more strongly associated with hospital case mix and with structural characteristics involving membership in a multiunit system, size, ownership, and location. The pervasive effect of case mix and the consistent effect of multiunit system involvement support the need for policymakers to give these factors particular attention in considering how hospitals and their medical staffs might respond to future regulatory and/or competitive approaches.