The purpose of the study was to identify and examine critical factors that either promote or hinder acute care hospitals decision-making on adopting complementary and alternative medicine (CAM). All acute care hospitals in the states of Oregon and Washington were included in the study. Individual interviews were conducted at the first phase of the study to elicit in-depth information and personal experiences related to a hospital's decision-making process of adopting CAM services, as well as how critical factors influenced the decision making. An e-mail survey was conducted at the second phase of the study to assess the relationship between a set of critical factors and whether hospitals offer CAM services. Data collected from interviews were sorted and synthesized by themes. Survey data analysis was conducted with generalized logistic regression, Chi-square test, multivariate analysis of variance, and descriptive analysis. The interview results suggested that the facilitators for hospitals to adopt CAM included favorable organizational mission and philosophy of providing care, patient and community interests in CAM, physician champions for CAM services, organizations' strategic positioning towards a competitive business environment, and the availability of financial and human resources for CAM programs. The barriers for hospitals to adopt CAM services included low reimbursement of CAM services, lack of physician support, lack of nationally accepted standards and criteria for credentialing CAM practitioners and quality control, and lack of resources and qualified CAM practitioners in certain geographic area. 132 email surveys were sent with approximately 30% response rate. The survey results confirmed that patient and community interest in CAM services and organizational mission and philosophy of providing care were two factors that significantly differentiated hospitals that offered CAM services from those that didn't. Descriptive analysis suggested that survey respondents tended to be smaller hospitals with lower operation margin, compared to the non-respondents. However, this difference was not statistically significant. The major findings of this study appeared to support Diffusion of Innovation theory, suggesting that an innovation is more likely to be adopted when it is more compatible with existing values and needs of potential adopters. The results of this study also were supportive of strategic management perspective in which adoption of an innovation can be a result of an organization’s strategic positioning to environmental and market forces. Based on the findings of this study, a list of practical recommendations for hospitals that are considering adopting CAM services were made. Suggestions for future studies were also discussed.