NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Trillion Dollar Conundrum: Complementarities and Health Information Technology

David Dranove, Christopher Forman, Avi Goldfarb, Shane Greenstein

NBER Working Paper No. 18281
Issued in August 2012
NBER Program(s):   IO   PR

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.

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This paper was revised on December 17, 2012

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Document Object Identifier (DOI): 10.3386/w18281

Published: David Dranove & Chris Forman & Avi Goldfarb & Shane Greenstein, 2014. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 239-70, November. citation courtesy of

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