The Impact of Information Technology Investments on Hospital Performance and Quality of Care

The business value of Information Technology (measuring the impact of IT investments on organizational productivity and efficiency) and quantifying Information technology’s tangible and intangible benefits havebeen significant areas of interest forresearchers and industry experts alike for more than threedecades. In healthcare, an information-rich industry that directly impacts peoples’ lives, investing in IT is still being challenged by questions of payoffs and returns; thus understanding how IT impacts quality outcomes and organizational financial performancein healthcare organizations is important in IT investment decisions. The goal of this research study is to critically examinethe business value of IT in healthcare. To this end, IT’s impact on hospital outcomes is assessed throughmeasures such as increasedpatient satisfaction, improved clinical outcomes (i.e. reduced numbers of adverse events incidents and rates of readmissions), and enhanced hospital financial condition. Additionally, the effect of readily available clinical and administrative data and well-aligned process redesign initiatives to enhance strategic decision making by leadership teams is considered. To address these issues, panel data on 17 performance indicators from 107 hospitals were collected to analyze the impact of IT investment on hospital financial performance and quality of outcomes. The study showsthat the relationship between IT investment and hospital performance measures is type dependent; community or small hospitals have different results from teaching hospitals,and IT investment has an impact on the financial condition of small hospitals only. Similarly, IT investments were shown to improve clinical outcomes in community hospitals but not in small or teaching hospitals. Finally, no direct relationship was found between IT investment and patient satisfaction in any type of hospital. The impact of IT investments is shown to be enhanced when combined with corresponding process-redesign initiatives; and making the right levels of investment in organizational corporate services such as administrative services, finance, human resources, and system support improved hospitals’ financial performance. Among the IT systems used in hospital organizationsare the decision support systems that enhance the decision-making capabilities of both clinicians and administrative leaders. The Hospital Analytics Dashboard is introduced as an example of the use of such systems to allow leaders to analyzehospital’s performance as it relates to the impact of IT on patient satisfaction, clinical outcomes, and financial conditions. This proof-of-concept decision support tool can be adapted to include other performance measures, and has been devised to help hospital leadership teams visualize and analyze the relationships among performance measurespresented in a static scorecard format.It provides benchmarking information from similar-sized hospitals and is accompanied by an interactive dashboard where historical performance information can be analyzed to predict future performance according to different inputs