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  3. American Economic Journal: Economic Policy
  4. November 2014
  5. The Trillion Dollar Conundrum: Complementarities and Health Information Technology

The Trillion Dollar Conundrum: Complementarities and Health Information Technology

  • David Dranove
  • Chris Forman
  • Avi Goldfarb
  • Shane Greenstein
American Economic Journal: Economic Policy
vol. 6, no. 4, November 2014
(pp. 239-70)
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Abstract

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.

Citation

Dranove, David, Chris Forman, Avi Goldfarb, and Shane Greenstein. 2014. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology." American Economic Journal: Economic Policy, 6 (4): 239-70. DOI: 10.1257/pol.6.4.239

Additional Materials

JEL Classification

  • D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • I11 Analysis of Health Care Markets
  • M15 IT Management
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