The trillion dollar conundrum: Complementarities and health information technology

David Dranove, Chris Forman, Avi Goldfarb, Shane Greenstein

Research output: Contribution to journalArticlepeer-review

41 Scopus citations

Abstract

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
Volume6
Issue number4
DOIs
StatePublished - 2014

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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