Paper Type
Complete
Description
Investments in health information technology (HIT) are known to improve operational and financial outcomes in hospitals. However, it is less understood whether this effect is short-term, medium-term, or long-term. This paper investigates the effect of HIT investments on hospitals’ cost-to-charge ratio, a financial metric that accounts for hospital costs and revenues, at different time lags following the initial investment. Using panel data on U.S. hospitals from 2010 to 2021, we report that the impact of HIT on hospital cost-to-charge ratio is realized with a lag of 0 to 4 years, when controlled for hospital differences such as rural vs urban location, public vs private ownership, proportion of uncompensated care, and year-over-year variations. This effect becomes non-significant in subsequent years as the effect of HIT wears out. We also quantify the returns from HIT investment. Every 1% increase in HIT investment results in a reduction of 3.3 to 6.0% in cost-to-charge ratio between 0 and 4 years after the HIT investment. Implications of these findings for research and practice are described.
Paper Number
1221
Recommended Citation
Somarouthu, Durga Prasad; Shah, Sahil Pankaj; and Bhattacherjee, Anol, "The Longitudinal Financial Impact of Health Information Technology Investments in Hospitals: A Panel Data Analysis" (2023). AMCIS 2023 Proceedings. 4.
https://aisel.aisnet.org/amcis2023/sig_health/sig_health/4
The Longitudinal Financial Impact of Health Information Technology Investments in Hospitals: A Panel Data Analysis
Investments in health information technology (HIT) are known to improve operational and financial outcomes in hospitals. However, it is less understood whether this effect is short-term, medium-term, or long-term. This paper investigates the effect of HIT investments on hospitals’ cost-to-charge ratio, a financial metric that accounts for hospital costs and revenues, at different time lags following the initial investment. Using panel data on U.S. hospitals from 2010 to 2021, we report that the impact of HIT on hospital cost-to-charge ratio is realized with a lag of 0 to 4 years, when controlled for hospital differences such as rural vs urban location, public vs private ownership, proportion of uncompensated care, and year-over-year variations. This effect becomes non-significant in subsequent years as the effect of HIT wears out. We also quantify the returns from HIT investment. Every 1% increase in HIT investment results in a reduction of 3.3 to 6.0% in cost-to-charge ratio between 0 and 4 years after the HIT investment. Implications of these findings for research and practice are described.
When commenting on articles, please be friendly, welcoming, respectful and abide by the AIS eLibrary Discussion Thread Code of Conduct posted here.
Comments
SIG Health