Functional IT Complementarity and Hospital Performance in the United States: A Longitudinal Investigation

This paper examines complementarity between clinical health information technology (HIT) applications and their effects on three hospital-level performance measures: clinical quality, experiential quality, and healthcare cost. We emphasize two aspects of HIT use in hospitals. First, we focus on whether HIT applications are used to perform primary or support clinical functions. Contingent on whether the use of HIT applications is for performing only primary functions or both primary and support functions, we conceptualize symbiotic and pooled HIT complementarity, respectively. Second, we focus on whether HIT applications are implemented in the same time period or different time periods. Contingent on this temporal aspect, we conceptualize simultaneous and sequential HIT complementarity, respectively. We collected panel data on HIT implementation, clinical quality, experiential quality, and healthcare cost for 715 hospitals in the United States from four sources. Our results suggest that symbiotic, pooled, simultaneous, and sequential complementarity among HITs impact hospital quality and cost outcomes. Our results further indicate that these complementary effects differ across chronic and acute conditions. We also find that three-way complementarity has significant economic effects on quality and cost. In fact, post hoc analyses indicate that three-way sequential complementarity effects, which have not been previously examined, are particularly significant. This paper contributes to the literature by empirically examining different forms of HIT complementarity in hospitals. Our central message is that when assessing HIT value in hospitals, managers and researchers must pay attention to (1) the clinical functions to which these technologies are applied; (2) the sequence in which these HITs are implemented; and (3) the prevalence of chronic versus acute patients admitted in the hospital.