Professor Kathryn Chang Measures Effect of Hospital Outsourcing on Financial Performance

New Study Confirms Link to Positive Performance, Uses Financial Data to Build on Existing Literature
October 20, 2015
Dr. Kathryn Chang, Professor of Business

Dr. Kathryn Chang, Professor of Business

Rohnert Park, CA - The School of Business and Economics (SBE) at Sonoma State University (SSU) announced a new study by Dr. Kathryn Chang, Assistant Professor of Business, entitled, "The Impact of Outsourcing on Hospital Performance", which was recently published in the quarterly issue of International Journal of Management Accounting Research.  The study builds on existing literature by using a data sample with financial performance metrics to examine hospital outsourcing of clinical and non-clinical services as a strategy to manage costs and improve performance. Results of the research demonstrate that subcontracting is positively tied to hospitals' financial performance, though varies depending on type of ownership.
"In the wake of national healthcare reform, hospitals need to reexamine their strategies to understand how performance will be affected in the new regulatory environment. Our research builds on existing studies using data extracted from financial statements of 315 for-profit, not-for-profit and governmental hospitals in California over a 10-year period. Results show that outsourcing of both support and patient care functions positively influence hospitals' current and future financial performance with the exception of government hospitals, which have faced less pressure historically to cut costs," Dr. Kathryn Chang said. 
"This study has practical, strategic implications for hospitals in the post healthcare reform era. Dr. Chang's team provides additional empirical evidence that supports outsourcing for hospitals that have higher transaction and production costs when services are performed in-house. This is exactly the kind of information health care providers need to inform strategies to lower costs and improve quality," Dr. Karen Thompson, Managing Director of Academic Programs and Chair of Business Administration said. 
The study found that the extent of outsourcing of clinical and non-clinical services was positively correlated to current financial performance across hospital types. It did not find a significant relationship between the extent of outsourcing services and future hospital performance in for-profit and government hospitals. 
For more information regarding Dr. Chang and her research, or for information regarding degree programs in the School of Business and Economics, please contact (707) 664-3501, or visit