Valuing hospital investment in information technology: does governance make a difference?

• Published in: Health care financing review Vol. 28; no. 2; pp. 31 - 43
• Main Authors: Parente, Stephen T, Van Horn, R Lawrence
• Format: Journal Article
• Language: English
• Published: United States Superintendent of Documents 01.01.2006; CENTERS for MEDICARE & MEDICAID SERVICES
• Subjects: Certificates of need; Competition; Competitive advantage; Cost control; Cost-Benefit Analysis; Data Collection; Databases as Topic; Diffusion of Innovation; Efficiency; Forecasts and trends; Health administration; Health maintenance organizations; HMOs; Hospital Administration; Hospital Information Systems - economics; Hospitals; Hospitals, Proprietary - economics; Hospitals, Voluntary - economics; Information management; Information technology; Initiatives; Inpatient care; Investment policy; Investments; Medical Records Systems, Computerized; Medicare; Nonprofit hospitals; Nonprofit organizations; Objectives; Order entry; Patient safety; Productivity; Profitability; Profits; Prospective payment systems; Reimbursement; Studies; United States; United States; United States > US
• ISSN: 0195-8631; 1554-9887

This article examines the investment of patient care information technology (IT) systems by a nationwide sample of U.S. short-term acute care hospitals and the resulting impact these systems have in the productivity of institutions from 1990-1998. Of particular interest is the extent to which for-profit and not-for-profit hospitals obtain different results from the adoption of lT systems. We find that the marginal effect of IT on for-profit hospital productivity is to reduce the number of days supplied, while in not-for-profit hospitals the marginal effect of IT is to increase the quantity of services supplied. This resulting effect is consistent with the differing objectives of not-for-profit and for-profit hospitals and demonstrates the positive marginal value of IT as a sustainable and prudent investment.