Purpose: Assert whether vendor strategy choice depends on environmental factors (dynamism, complexity, and munificence), and/or hospital characteristics.

Methodology/Approach: This study uses a longitudinal design to analyze secondary data from the Healthcare Information and Management Systems Society (HIMSS) Database and the Area Resource File (ARF). A fixed-effects multinomial logit model is used as the main model to evaluate the effect of environmental factors on strategy selection, controlling for a set of hospital characteristics consistently used in previous studies.

Findings: Overall, 4,799 hospitals were studied in a five-year period (2005-2009) with a sample of 19,269 hospital-years. The most extensively used vendor strategy across this time period is the single-vendor strategy (40.9% in 2005 and reaching 54.2% in 2009). The least adopted strategy is the Best of Breed (BoB) vendor strategy (starting at 11.2% in 2005 and reaching 8.6% in 2009). Environmental munificence, dynamism and complexity have a role to play on strategy selection. Nevertheless, in this study we found that the direction of the effects differs from the ones reported in previous studies. Greater munificence in the environment increases the chances of a hospital opting for the BoS vendor strategy over the single vendor strategy, as suggested by other studies. On the other hand, the direction of the effects for dynamism and complexity go in the opposite direction to the one reported in previous literature. Hospitals’ managers seem to prefer the single vendor strategy instead of the BoB strategy in more dynamic environments and the single vendor strategy instead of the BoS strategy in more complex environments. Finally, almost no organizational factors are significant after controlling for unobserved heterogeneity. Only membership to a multihospital integrated delivery system is significant after controlling for time-invariant unobserved heterogeneity.

Policy Implications: Initiatives promoting and incentivizing hospitals to adopt particular vendor strategies that are most likely to result in more comprehensive HIT systems, need to consider that some potential enablers or barriers to achieve those goals are market-based.