An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Richard P Silkoff
Eastern Connecticut State University

Abstract: Recent research has examined the types of organizational behavior associated with hospital divestitures. The acceptance of divestiture as a strategy may reflect patterns of consolidation that require hospitals to remove assets that do not contribute to the core mission of the system. Using a sample of 362 hospitals, an examination of the effects of integration and ownership control on divestiture, and the interaction of these factors on financial performance, was conducted. Utilizing data from archival sources (American Hospital Association, Health Care Financing Administration), probit regression, a method appropriate for analyzing longitudinal data with a continuous dependent variable but with both dichotomous and continuous independent variables, was used to test three hypotheses. Findings show that hospital divestitures remove activities that have negative value, and that integration and ownership control provide incentives to improve financial performance even after divestiture.

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