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Measuring the cost impact of hospital information systems: 1987-1994

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  • Ron Borzekowski

Abstract

This study measures the impact of information technology (IT) use on hospital operating costs during the late 1980's and early 1990's. Using a proprietary eight-year panel dataset (1987-1994) that catalogues application-level automation for the complete census of the 3,000 U.S. hospitals with more than 100 beds, this study finds that both financial/administrative and clinical IT systems at the most thoroughly automated hospitals are associated with declining costs three and five years after adoption. At the application level, declining costs are associated with the adoption of some of the newest technologies, including systems designed for cost management, the administration of managed care contracts, and for both financial and clinical decision support. The association of cost declines with lagged IT as well as the cost patterns at the less automated hospitals both provide evidence of learning effects.

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Bibliographic Info

Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2002-42.

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Date of creation: 2002
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Handle: RePEc:fip:fedgfe:2002-42

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Keywords: Hospitals - Finance ; Information technology;

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References

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  2. Jonathan Gruber & Maria Owings, 1996. "Physician Financial Incentives and Cesarean Section Delivery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 99-123, Spring.
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  6. Kessler, Daniel & McClellan, Mark, 1996. "Do Doctors Practice Defensive Medicine?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 353-90, May.
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  8. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
  9. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  10. Vita, Michael G., 1990. "Exploring hospital production relationships with flexible functional forms," Journal of Health Economics, Elsevier, vol. 9(1), pages 1-21, June.
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Cited by:
  1. David Dranove & Christopher Forman & Avi Goldfarb & Shane Greenstein, 2012. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology," NBER Working Papers 18281, National Bureau of Economic Research, Inc.
  2. Felix Köbler & Jens Fähling & Helmut Krcmar & Jan Leimeister, 2010. "IT Governance and Types of IT Decision Makers in German Hospitals," Business & Information Systems Engineering, Springer, vol. 2(6), pages 359-370, December.
  3. Natalia Zhivan & Mark Diana, 2012. "U.S. hospital efficiency and adoption of health information technology," Health Care Management Science, Springer, vol. 15(1), pages 37-47, March.
  4. Jinhyung Lee & Jeffrey S. McCullough & Robert J. Town, 2012. "The Impact of Health Information Technology on Hospital Productivity," NBER Working Papers 18025, National Bureau of Economic Research, Inc.

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