The trillion dollar conundrum: Complementarities and health information technology

David Dranove, Chris Forman, Avi Goldfarb, Shane Greenstein

Research output: Contribution to journalArticlepeer-review

71 Scopus citations


We examine the heterogeneous relationship between the adoption of EMR and hospital operating costs at thousands of US hospitals between 1996 and 2009. We first document a previously-identified puzzle: Adoption of EMR is associated with a slight cost increase. Drawing on the literature on IT and productivity, we analyze why this average effect arises. We find that: (i ) EMR adoption is initially associated with a rise in costs; (ii ) EMR adoption at hospitals in IT-intensive locations leads to a decrease in costs after three years; and (iii ) Hospitals in other locations experience an increase in costs even after six years.

Original languageEnglish (US)
Pages (from-to)239-270
Number of pages32
JournalAmerican Economic Journal: Economic Policy
Issue number4
StatePublished - 2014

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)


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