The Effects of Relative Resource Configuration, Organizational Legitimacy, and Integration on Divestiture Decisions among Health Systems

The determinants of divestiture in health systems are examined to enhance the understanding of hospital divestiture and identify factors that enhance a hospital's value to the system and thus its likelihood of being retained.

Abstract

This study examines the determinants of divestiture in health systems. Financial performance is a common indicator of a hospital's value. However, health systems may consider other factors that influence a hospital's value to the system. To enhance our understanding of hospital divestiture, we identify factors that enhance a hospital's value to the system and thus its likelihood of being retained. Our findings support previous studies that financial performance influences divestiture decisions. At the same time, our results identify three other factors influencing divestiture decisions: relative resource configuration, legitimacy, and integration.