The impact of health IT on hospital productivity after the enactment of HITECH Act

ABSTRACT

We investigated the impact of health IT on hospital productivity after HITECH Act in USA.Retrospective cohort study used hospital financial data from the Office of Statewide Health Planning and Development (OSHPD). The hospital sample included 1,843 from 2010 to 2015. The effect of health IT on hospital productivity was evaluated using dynamic panel data analysis to control endogeneity problems in production function. We found a significant impact of IT on hospital productivity. Marginal productivity of IT capital and IT labor were 1.42 and 6.15, respectively. However, to have an optimal productivity given the current state of technology, IT capital and IT labor should be invested up to 8% and 10% of value-added, respectively. With the enactment of HITECH act, health IT investment has increased significantly. However, more IT should be invested to maximize hospital productivity. Based on this finding, managers or practitioners in hospitals can be more confident when investing in health IT.

KEYWORDS:

• Health IT
• electronic health record
• HITECH act
• productivity

JEL CLASSIFICATION:

• I11
• I18

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ We followed Lee, McCullough, and Town (2013) in Method section and see more detailed process in Lee, McCullough, and Town (2013).

² Based on the Modified Accelerated Cost Recovery System (MACRS), a five-year linear deprecation schedule was utilized to construct annual physical IT capital stock for each hospital in our data.

Additional information

Funding

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [NRF-2018S1A5A2A02065525].