Is health information technology investment related to the financial performance of US hospitals? An exploratory analysis

Abstract

Information systems lie at the centre of organized delivery systems, providing opportunities to improve access, outcomes, and quality benefiting consumers, providers, insurers, and purchasers. However, it is unknown whether hospital financial performance improves after investment in these systems. Our study finds that hospitals with integrated information systems had a 1.7% higher total margin and a 1.0% higher operating margin in 1993 than hospitals without integrated information systems. This greater profitability persisted between 1993-1996, with an average 0.87% greater total margin among hospitals with integrated information systems than without. Our analysis suggests that investments by US hospitals in integrated information systems contributes to improved financial performance and offers subjects for future research.

Hospital Computing and the Costs and Quality of Care: A National Study

“…On the plus side, a 2001 study found that hospitals with integrated information systems were more profitable. 31 Florida hospitals using more information technology had higher revenues and incomes, but higher expenses. 32 A literature review found that the use of an electronic medical record often increases billings but reduces provider productivity by increasing time spent on documentation.…”

Prevalence of Electronic Health Records in U.S. Hospitals

“…Within the United States, early work by Parente and Dunbar [26] used a survey of US hospitals receiving Medicare prospective payment to examine the relationship between a hospital's financial performance and its adoption of integrated information systems. In bivariate analyses, they found that hospitals investing in IT had higher total profit margins, but that the relationship disappeared within the multivariate regression specification.…”

An assessment of business intelligence in public hospitals

“…BI is an umbrella term that covers the applications, infrastructure, tools, and best practices that enable organizations to access and analyze information with the aim of improving and optimizing decisions and performance [5]. Notably, a study by Parente and Dunbar shows that healthcare organizations that use HIS have higher operating margins and total margins than organizations without HIS [6].…”