Technical Report: The Business Case for Healthcare Information Technology in Nursing Homes

35 Pages Posted: 26 Nov 2011  

Lorin M. Hitt

University of Pennsylvania - Operations & Information Management Department

Prasanna Tambe

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

Date Written: November 26, 2011

Abstract

We investigate whether the implementation of electronic medical records is associated with higher levels of economic performance in nursing homes in terms of quality, profitability, cost, productivity, and efficiency. Our analysis is based on a survey of Healthcare Information Technology (HIT) usage for approximately 200 New York State Nursing Homes, including 26 that participated in the NY Nursing Home Demonstration project. The survey data are combined with regulatory data from CMS Nursing Home Compare and the NY State RHCF-4 financial reports. The analysis uses a “difference in differences approach” comparing changes in economic performance in a facility before and after HIT implementation to changes over the same time periods in other facilities that are known to not have implemented HIT.

Overall, we do not find conclusive evidence that adoption of HIT raises productivity, increases commonly used performance measures, or improves quality scores in the short run. There is some evidence of a positive effect after several years. We do find that there appears to be a slight increase (1-3%) in variable costs, but also slightly greater efficiency when measured by frontier analysis. However, facilities that adopt HIT and either adopt or have in place progressive work practices (which include greater staff autonomy, cooperative labor-management relations, and greater teamwork) consistently show performance gains. Firms that are one standard deviation higher on our progressive work practice score get a 2-3% increase in productivity, a 2-3% reduction in costs and a 1-2% incremental efficiency gain upon adoption of HIT relative to their peers.

Our results suggest that adoption of EMR can have significant positive economic benefits when implemented in conjunction with progressive work practices.

Keywords: healthcare information technology, nursing homes, electronic medical records

Suggested Citation

Hitt, Lorin M. and Tambe, Prasanna, Technical Report: The Business Case for Healthcare Information Technology in Nursing Homes (November 26, 2011). Available at SSRN: https://ssrn.com/abstract=1964841 or http://dx.doi.org/10.2139/ssrn.1964841

Lorin M. Hitt (Contact Author)

University of Pennsylvania - Operations & Information Management Department ( email )

571 Jon M. Huntsman Hall
Philadelphia, PA 19104
United States
215-898-7730 (Phone)
215-898-3664 (Fax)

Prasanna Tambe

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )

44 West Fourth Street
New York, NY 10012
United States

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