Management accounting research (e.g., Khandwalla, 1972; Ewusi-Mensah, 1981; Gordon and Narayanan, 1984) suggests that organizational characteristics influence the type and use of accounting and information systems within organizations and that as environmental uncertainty increases, decision makers seek more information for planning and control. Within the hospital industry, governmental cost controls through changes in the Medicare reimbursement system and increased competition provide a unique opportunity to analyze hospitals' reactions to these environmental uncertainties. My study investigates the impact of these factors on the adoption of hospital costing systems over the period 1980–1990. Using event history analysis, I incorporate changes in revenue reimbursement, competition, and organizational characteristics to measure the impact on hospitals’ decisions to utilize more advanced costing control systems. Empirical results suggest that the change in the Medicare reimbursement policy was a driving force in the adoption of costing systems over the 1980s. As revenue constraints increased, the rate of costing system adoption also increased. Further, competition had a smaller, but positive, impact on costing system adoption. Organizational characteristics including ownership, size, and whether the hospitals was a part of a multi-hospital system were also significant in impacting costing system adoption. However, despite the significant change in reimbursement policy, only 37.8% of responding hospitals had begun to use a costing system during the 1980s.