The Trillion Dollar Conundrum: Complementarities and Health Information Technology

47 Pages Posted: 10 Aug 2012 Last revised: 15 Jun 2023

See all articles by David Dranove

David Dranove

Northwestern University - Kellogg School of Management

Chris Forman

Cornell University - Charles H. Dyson School of Applied Economics and Management

Avi Goldfarb

University of Toronto - Rotman School of Management

Shane M. Greenstein

National Bureau of Economic Research (NBER); Harvard University - Technology & Operations Management Unit

Date Written: August 2012

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.

Suggested Citation

Dranove, David and Forman, Chris and Goldfarb, Avi and Greenstein, Shane M. and Greenstein, Shane M., The Trillion Dollar Conundrum: Complementarities and Health Information Technology (August 2012). NBER Working Paper No. w18281, Available at SSRN: https://ssrn.com/abstract=2127546

David Dranove (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
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Chris Forman

Cornell University - Charles H. Dyson School of Applied Economics and Management ( email )

Ithaca, NY
United States

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Shane M. Greenstein

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

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