The Impact of Information Technology and Communication on Medical Malpractice Lawsuits

Health care organizations have substantially invested in Health Information Technology (HIT) as part of an effort to improve quality. However, many hospitals fail to generate positive returns on this significant investment, based on reimbursements for quality measures through the Affordable Care Act (ACA). Given the high cost of lawsuits, we investigate if HIT adoption reduces lawsuits, and their attendant costs, as another consideration in HIT payoffs. We use operational transparency theory to develop hypotheses on the individual and joint impact of HIT and communication quality in influencing patients’ likelihood to file a lawsuit. We combine data on 168 hospitals in the state of Florida from 2007 to 2011 in order to investigate these relationships. Analysis using a fractional response model indicates that HIT has a direct impact in reducing the number of lawsuits, this effect being higher for hospitals with higher communication quality scores. These results remain consistent irrespective of the type of caregiver (physician vs nurse) communicating with the patient or the severity of injury resulting in the lawsuit. Our results also remain robust under different operationalization of key independent variables and alternate model specifications. These results provide a better understanding of the mechanisms that reduce lawsuits.