Background: Freestanding emergency departments (FSEDs) are fast growing entities in health care, delivering emergency care outside of hospitals. Hospitals may benefit in several ways by opening FSEDs. Purpose: The study used the resource dependence theory as a means to analyze the relationship between market and organizational factors and the likelihood of hospitals to operate FSEDs. Methodology: All acute care hospitals in 14 states with FSEDs present during the study period from 2002 to 2011. Data on FSEDs were merged with American Hospital Association Annual Survey, Centers for Medicare and Medicaid Services' Cost Reports, and Area Resource File data. The outcome variable consists of whether or not the hospital operates an FSED. Independent variables include per capita income, percent population over age of 65 years, primary care and specialist physicians per capita, urban location, change in the unemployment rate, change in the population, change in poverty level, market competition, total satellite and autonomous FSEDs in the market, Medicare-managed care penetration rate, hospital beds, total margin, and system membership. We used logistic regression analysis with state and year fixed effects. Standard errors in the regression were clustered by hospital. Principal Findings: The number of hospitals operating satellite FSEDs increased from 32 (2.33%) in 2002 to 91 (5.76%) hospitals in 2011 among the 14 states included in the study sample. The results support the hypothesis that hospitals located in munificent environments and more competitive environments (presence of other FSEDs) are more likely to operate an FSED. Organizational level factors such as bed size and system membership are associated with a hospital operating an FSED. Practice Implications: The findings may be used by policy makers in developing regulations for hospitals opening FSEDs. Also, study findings of this study may be used by hospitals to make informed decisions when formulating strategies regarding FSEDs.