Abstract

Since the COVID-19 pandemic, hospitals have rapidly expanded telehealth beyond single-function adoption toward multi-function portfolios embedded in routine care delivery (Alakeel et al., 2025). Yet prior research has largely treated telehealth as a discrete adoption choice, leaving a gap in our understanding of how hospitals build telehealth portfolios over time, which functionalities become foundational, and when those portfolios translate into measurable improvements in clinical quality and patient safety. To address this gap, we integrate diffusion of innovation (DOI) and complementarity theory to argue that foundational tele-office adoption creates reusable organizational complements—virtual-care workflows, staffing routines, reimbursement knowledge, and governance templates—that lower the marginal complexity of later specialized modalities while enabling portfolio-level synergies (Dewan et al., 2010; Mishra et al., 2022). We merged data from the American Hospital Association and Centers for Medicare & Medicaid Services to construct a dataset of 17,594 hospital-year observations from 4,805 distinct hospitals over five years (2019–2023). We differentiate hospital-based telehealth (e.g., tele-eICU, tele-stroke) for acute care delivery within the hospital from home-based telehealth (e.g., tele-mental health, remote patient monitoring) for extending care to patients at home and conceptualize tele-office as a foundational technology. Using a lagged bivariate latent growth model and a two-stage least squares (2SLS) instrumental variables (IV) framework, we examine portfolio expansion and estimate the effects of hospital-based and home-based telehealth portfolios on mortality, patient safety indicators, and readmissions. Preliminary findings show a path-dependent process of portfolio evolution. Early tele-office adoption enables broader initial adoption of specialized telehealth services, and growth in tele-office capability accelerates the addition of specialized telehealth modalities. Hospital-based functionalities are associated with lower mortality and improved patient safety, whereas home-based functionalities show limited effects on readmissions. Joint implementation of hospital-based and home-based portfolios yields additional mortality reductions, especially in clinically complex hospitals and in settings with greater staffing capacity. The study contributes by integrating DOI and complementarity theory into a dynamic model of technology portfolio evolution. We extend DOI’s scope to the portfolio level by showing how foundational telehealth adoption shapes both the initial breadth and subsequent growth of specialized telehealth portfolios. We further show that the value of technology complementarity is not uniform; it is amplified by clinical needs (patient complexity) and enabled by sociotechnical resources (staffing capacity).

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