The Magnet Recognition Program for healthcare organizations promotes excellence in nursing services and professional practices. However, organizational and community characteristics that contribute to the adoption of Magnet status remain unexplained. Investigating organizational and community factors will help determine systematic structural and contextual dimensions of Magnet hospitals previously shown to be more cost-effective in comparison with non-Magnet hospitals. Using the baseline 2005 database of all Magnet hospitals in the United States, the authors selected a matched sample to determine key organizational and community characteristics associated with Magnet adoption while controlling for regional and local factors. Four tertiary databases were merged to identify measures of organizational and community characteristics of 132 Magnet hospitals and 264 non-Magnet pairs matched in closest proximity. The authors used bivariate tests and logistic regression to analyze the data. The findings show that Magnet adoption was positively associated with teaching affiliation, hospital size, nonprofit ownership, admission rates, and registered nurse (RN) staffing rates, but was negatively associated with licensed practical nurse (LPN) staffing rates. In the logit model, key organizational factors associated with the likelihood of Magnet adoption were larger hospitals, higher RN staffing rates, and lower LPN staffing rates. Key community factors were location in less densely populated counties and higher emergency department visit rates. The study findings reinforce previously established hypotheses that better RN staffing of Magnet hospitals is associated with higher cost-effectiveness. The study also adds key organizational and community factors that differentiate Magnet adoption. The Magnet concept as an innovative strategic choice assists healthcare leaders in better managing their resources to improve the cost-effectiveness of hospital care.