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Blunting Damocles' Sword: A Longitudinal Model of Healthcare IT Impact on Malpractice Insurance Premium and Quality of Patient Care

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  • Nirup M. Menon

    (School of Management, George Mason University, Fairfax, Virginia 22030)

  • Rajiv Kohli

    (Mason School of Business, College of William and Mary, Williamsburg, Virginia 23187)

Abstract

Prior studies on the business value of information technology (IT) mainly focus on the impact of IT investments on productivity and firm profitability. Few have considered its implication on expected and actual product or service quality. This paper fills this gap by investigating the impact of past healthcare IT (HIT) expenditure on the malpractice insurance premium (MIP) and the moderating effect of past HIT expenditure on the relationship between past MIP and current quality of patient care in a longitudinal model. Based on archival panel data on costs, operations, and patient care outcomes of 66 hospitals in the U.S. state of Washington from 1998 to 2007, we find that past HIT expenditure is negatively associated with MIP, supporting our argument that HIT provides value that is anticipated by insurers and is captured by a change in MIP. We find that past HIT is positively associated with quality of patient care. We also find that past MIP is positively associated with quality of patient care, supporting the premise that hospitals respond to MIP by making risk mitigation efforts. However, we find that past HIT moderates this relationship negatively, suggesting a reliance on HIT at the expense of risk mitigation.

Suggested Citation

  • Nirup M. Menon & Rajiv Kohli, 2013. "Blunting Damocles' Sword: A Longitudinal Model of Healthcare IT Impact on Malpractice Insurance Premium and Quality of Patient Care," Information Systems Research, INFORMS, vol. 24(4), pages 918-932, December.
    • Handle: RePEc:inm:orisre:v:24:y:2013:i:4:p:918-932
    DOI: 10.1287/isre.2013.0484
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    References listed on IDEAS

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    2. Torsten Oliver Salge & David Antons & Michael Barrett & Rajiv Kohli & Eivor Oborn & Stavros Polykarpou, 2022. "How IT Investments Help Hospitals Gain and Sustain Reputation in the Media: The Role of Signaling and Framing," Information Systems Research, INFORMS, vol. 33(1), pages 110-130, March.
    3. Jinhyung Lee, 2017. "Impact of hospitalist care on hospital malpractice premiums using California hospital data," Applied Economics Letters, Taylor & Francis Journals, vol. 24(11), pages 742-752, June.
    4. Hemant K. Bhargava & Abhay Nath Mishra, 2014. "Electronic Medical Records and Physician Productivity: Evidence from Panel Data Analysis," Management Science, INFORMS, vol. 60(10), pages 2543-2562, October.
    5. Brad N. Greenwood & Kartik K. Ganju & Corey M. Angst, 2019. "How Does the Implementation of Enterprise Information Systems Affect a Professional’s Mobility? An Empirical Study," Information Systems Research, INFORMS, vol. 30(2), pages 563-594, June.
    6. Ancarani, Alessandro & Di Mauro, Carmela & Gitto, Simone & Mancuso, Paolo & Ayach, Ali, 2016. "Technology acquisition and efficiency in Dubai hospitals," Technological Forecasting and Social Change, Elsevier, vol. 113(PB), pages 475-485.
    7. Tharanga Rajapakshe & Subodha Kumar & Arun Sen & Chelliah Sriskandarajah, 2020. "Sustainability Planning for Healthcare Information Exchanges with Supplier Rebate Program," Operations Research, INFORMS, vol. 68(3), pages 793-817, May.
    8. Cheng, Cong & Wang, Limin, 2022. "How companies configure digital innovation attributes for business model innovation? A configurational view," Technovation, Elsevier, vol. 112(C).
    9. Ramkumar Janakiraman & Eunho Park & Emre M. Demirezen & Subodha Kumar, 2023. "The Effects of Health Information Exchange Access on Healthcare Quality and Efficiency: An Empirical Investigation," Management Science, INFORMS, vol. 69(2), pages 791-811, February.
    10. Ruba Aljafari & Franck Soh & Pankaj Setia & Ritu Agarwal, 2024. "The local environment matters: Evidence from digital healthcare services for patient engagement," Journal of the Academy of Marketing Science, Springer, vol. 52(5), pages 1343-1365, October.
    11. Abhay Nath Mishra & Youyou Tao & Mark Keil & Jeong-ha (Cath) Oh, 2022. "Functional IT Complementarity and Hospital Performance in the United States: A Longitudinal Investigation," Information Systems Research, INFORMS, vol. 33(1), pages 55-75, March.
    12. Singha, Sumanta & Arha, Himanshu & Kar, Arpan Kumar, 2023. "Healthcare analytics: A techno-functional perspective," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    13. Seung Hyun Kim & Juhee Kwon, 2019. "How Do EHRs and a Meaningful Use Initiative Affect Breaches of Patient Information?," Information Systems Research, INFORMS, vol. 30(4), pages 1184-1202, December.
    14. Sam Ransbotham & Eric M. Overby & Michael C. Jernigan, 2021. "Electronic Trace Data and Legal Outcomes: The Effect of Electronic Medical Records on Malpractice Claim Resolution Time," Management Science, INFORMS, vol. 67(7), pages 4341-4361, July.

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