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This study aims to contribute to the ongoing policy and scholarly debate on physician-hospital integration (INT) and health care cost by providing evidence for the role of physician boards in mitigating hospital expenditure associated with INT.We conducted our study of the relationship between INT, physician boards, and hospital expenditure using data on hospitals in California. We obtained data from the Centers for Medicare and Medicaid Services, American Hospital Association, and California Office of Statewide Health Planning and Development from 2002 to 2006. A hospital fixed-effect ordinary least square (OLS) regression analysis was used.Hospital expenditure was higher in a hospital with an integrated arrangement (e.g., a hospital that adopted an integrated salary model) than under other independent arrangements between physicians and hospitals, and the proportion of physician members on hospital boards negatively moderated the effect of integration on hospital expenditure.Physician boards may provide a context that affords benefits that can reduce hospital expenditures under INT. This finding highlights the importance to having a supportive organizational design when implementing INT.