Defense Date


Document Type


Degree Name

Doctor of Philosophy


Health Administration

First Advisor

Dr. Robert E. Hurley


The purpose of this study was to determine the factors associated with outsourcing of information systems (IS), and if there is a difference in IS sourcing based on the strategic value of the outsourced functions. The theoretical framework is based upon a synthesis of strategic management theory (SMT) and transaction cost economics (TCE) as they apply to vertical integration in the health care sector; therefore, IS sourcing behavior was conceptualized as a case of vertical integration. The conceptual model proposed that sourcing behavior would be determined by asset specificity, uncertainty, the interaction of asset specificity and uncertainty, bargaining power, corporate strategy needs, and the strategic value of the IS functions outsourced.A cross sectional design was used, consisting of data from the American Hospital Association (AHA), the Area Resource File (ARF), the HIMSS Analytics database, and the Centers for Medicare and Medicaid Services (CMS) hospital cost reports for 2003. The final sample consisted of 1,365 health care delivery systems and 3,452 hospitals. Analysis was conducted using a two-stage negative binomial regression model (using instrumental variables) to correct for suspected endogeneity. Tests of joint restrictions using the group of variables derived from TCE and SMT, respectively, were done with the dependent variable divided between strategic and non-strategic IS functions (the division was done based on a model of Core IS Capabilities developed as a model for a high-performance IS function).The results supported the relationship between bargaining power and IS outsourcing. Results for asset specificity and corporate strategy needs were significant in the opposite direction than hypothesized. No other findings were significant. These results suggest that hospital system managers are likely not considering significant factors when making sourcing decisions, including the relative strategic value of the functions they are outsourcing. This study contributes to the limited body of knowledge surrounding IS sourcing behavior in the health care sector. Future research should examine the effect of cost on IS sourcing decisions, and consider the use of alternative theoretical frameworks, particularly Institutional Theory.


© The Author

Is Part Of

VCU University Archives

Is Part Of

VCU Theses and Dissertations

Date of Submission