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

  • Ron Borzekowski

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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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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  1. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
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  4. Jonathan Gruber & Maria Owings, 1994. "Physician Financial Incentives and Cesarean Section Delivery," NBER Working Papers 4933, National Bureau of Economic Research, Inc.
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  6. Randall Randall P. Ellis, 1991. "Hospital Cost Function Estimation When Firms May Not Try to Minimize Total Costs," Papers 0029, Boston University - Industry Studies Programme.
  7. Jeffrey S. McCullough, 2008. "The adoption of hospital information systems," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 649-664.
  8. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  9. Casey Ichniowski & Kathryn Shaw & Giovanna Prennushi, 1995. "The Effects of Human Resource Management Practices on Productivity," NBER Working Papers 5333, National Bureau of Economic Research, Inc.
  10. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
  11. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
  12. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
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