Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Thursday, January 17, 2013

DOES HEALTH INFORMATION TECHNOLOGY REDUCE COSTS?

Posted by D. Daniel Sokol

David Dranove (Northwestern), Christopher Forman (Georgia Tech), Avi Goldfarb (Toronto), and Shane Greenstein (Northwestern) ask DOES HEALTH INFORMATION TECHNOLOGY REDUCE COSTS?

ABSTRACT: We examine the relationship between the adoption of EMR and hospital operating costs. We first identify a puzzle that has been seen in prior studies: Adoption of EMR is associated with a slight cost increase. We draw on the literature on IT and productivity to demonstrate that the average effect masks important differences across time, locations, and hospitals. We find: (1) EMR adoption is initially associated with higher costs; (2) At hospitals with access to complementary inputs, EMR adoption leads to a cost decrease after three years; (3) Hospitals in unfavorable conditions experience increased costs even after six years.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/01/does-health-information-technology-reduce-costs.html

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