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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. David H. Autor & Frank Levy & Richard J. Murnane, 2002. "Upstairs, downstairs: Computers and skills on two floors of a large bank," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(3), pages 432-447, April.
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  3. 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.
  4. Jeffrey S. McCullough, 2008. "The adoption of hospital information systems," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 649-664.
  5. 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.
  6. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc.
  7. Vita, Michael G., 1990. "Exploring hospital production relationships with flexible functional forms," Journal of Health Economics, Elsevier, vol. 9(1), pages 1-21, June.
  8. 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.
  9. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
  10. 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.
  11. repec:oup:qjecon:v:111:y:1996:i:2:p:353-90 is not listed on IDEAS
  12. 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.
  13. repec:oup:qjecon:v:117:y:2002:i:1:p:339-376 is not listed on IDEAS
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