The Effects of Health Information Technology Adoption and Hospital-Physician Integration on Hospital Efficiency

Objectives To determine the impact of health information technology (HIT) adoption and hospital-physician integration on hospital efficiency. Study Design Using 2010 data from the American Hospital Association's (AHA) annual survey, the AHA IT survey, supplemented by the CMS Case Mix Index, and the US Census Bureau's small area income and poverty estimates, we examined how the adoption of HIT and employment of physicians affected hospital efficiency and whether they were substitutes or complements. Methods The sample included 2173 hospitals. We employed a 2-stage approach. In the first stage, data envelopment analysis was used to estimate technical efficiency of hospitals. In the second stage, we used instrumental variable approaches, notably 2-stage least squares and the generalized method of moments, to examine the effects of IT adoption and integration on hospital efficiency. Results We found that HIT adoption and hospital-physician integration, when considered separately, each have statistically significant positive impacts on hospital efficiency. Also, we found that hospitals that adopted HIT with employed physicians will achieve less efficiency compared with hospitals that adopted HIT without employed physicians. Conclusions Although HIT adoption and hospital-physician integration both seem to be key parts of improving hospital efficiency when one or the other is utilized individually, they can hurt hospital efficiency when utilized together.