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.
Dranove, David, Chris Forman, Avi Goldfarb, and Shane Greenstein.
"The Trillion Dollar Conundrum: Complementarities and Health Information Technology."
American Economic Journal: Economic Policy,
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Analysis of Health Care Markets