Technological Innovation and Productivity in Service Delivery: Evidence from the Adoption of Electronic Medical Records

Abstract:

Information technology (IT) can improve productivity by simultaneously affecting operational efficiency for a given worker and the coordination of different workers. I investigate IT adoption in a service setting by considering the impact of electronic medical records (EMRs) on the length of stay and clinical outcomes of patients in US hospitals. To uncover the distinct impacts of EMRs on operational efficiency and care coordination, I present evidence of heterogeneous effects by patient complexity. I find that EMRs have the largest impact for relatively simple patients. Admission to a hospital with an EMR is associated with a 2% reduction in length of stay and a 9% reduction in thirty-day mortality for such patients. In contrast, there is no statistically significant benefit for complex patients. However, I present three additional results for complex cases. First, patients returning to the same hospital benefit relative to those who previously went to a different hospital, which could be due to easier access to past electronic records. Second, computerized order entry is associated with higher billed charges. Finally, hospitals that have a high share of publicly insured patients, and hence a bigger incentive to curb resource use, achieve a greater reduction in length of stay for complex patients after EMR adoption.

Last updated on 11/24/2014