The effects of health information technology on the costs and quality of medical care

J Health Econ. 2014 Mar:34:19-30. doi: 10.1016/j.jhealeco.2013.12.005. Epub 2014 Jan 7.


Information technology has been linked to productivity growth in a wide variety of sectors, and health information technology (HIT) is a leading example of an innovation with the potential to transform industry-wide productivity. This paper analyzes the impact of health information technology (HIT) on the quality and intensity of medical care. Using Medicare claims data from 1998 to 2005, I estimate the effects of early investment in HIT by exploiting variation in hospitals' adoption statuses over time, analyzing 2.5 million inpatient admissions across 3900 hospitals. HIT is associated with a 1.3% increase in billed charges (p-value: 5.6%), and there is no evidence of cost savings even five years after adoption. Additionally, HIT adoption appears to have little impact on the quality of care, measured by patient mortality, adverse drug events, and readmission rates.

Keywords: 033; Health information technology; Hospital productivity; I10.

Publication types

  • Research Support, N.I.H., Extramural
  • Research Support, U.S. Gov't, Non-P.H.S.

MeSH terms

  • Aged
  • Delivery of Health Care / economics
  • Delivery of Health Care / statistics & numerical data
  • Drug-Related Side Effects and Adverse Reactions / epidemiology
  • Health Care Costs* / statistics & numerical data
  • Hospital Mortality
  • Hospitals / standards
  • Hospitals / statistics & numerical data
  • Humans
  • Medical Informatics*
  • Patient Readmission / statistics & numerical data
  • Quality of Health Care* / economics
  • Quality of Health Care* / statistics & numerical data