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Objective. To test the hypothesis that physicians who work in different hospitals adapt their length of stay decisions to what is usual in the hospital under consideration. Data Sources. Secondary data were used, originating from the Statewide Planning and Research Cooperative System (SPARCS). SPARCS is a major management tool for assisting hospitals, agencies, and health care organizations with decision making in relation to financial planning and monitoring of inpatient and ambulatory surgery services and costs in New York state. Study Design. Data on length of stay for surgical interventions and medical conditions (a total of seven diagnosis-related groups [DRGs]) were studied, to find out whether there is more variation between than within hospitals. Data (1999, 2000, and 2001) from all hospitals in New York state were used. The study examined physicians practicing in one hospital and physicians practicing in more than one hospital, to determine whether average length of stay differs according to the hospital of practice. Multilevel models were used to determine variation between and within hospitals. A t-test was used to test whether length of stay for patients of each multihospital physician differed from the average length of stay in each of the two hospitals. Principal Findings. There is significantly ( p<.05) more variation between than within hospitals in most of the study populations. Physicians working in two hospitals had patient lengths of stay comparable with the usual practice in the hospital where the procedure was performed. The proportion of physicians working in one hospital did not have a consistent effect for all DRGs on the variation within hospitals. Conclusion. Physicians adapt to their colleagues or to the managerial demands of the particular hospital in which they work. The hospital and broader work environment should be taken into account when developing effective interventions to reduce variation in medical practice. [ABSTRACT FROM AUTHOR]