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Investment Subsidies and the Adoption of Electronic Medical Records in Hospitals

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  • David Dranove
  • Craig Garthwaite
  • Bingyang Li
  • Christopher Ody

Abstract

In February 2009 the U.S. Congress unexpectedly passed the Health Information Technology for Economic and Clinical Health Act (HITECH). HITECH provides up to $27 billion to promote adoption and appropriate use of Electronic Medical Records (EMR) by hospitals. We measure the extent to which HITECH incentive payments spurred EMR adoption by independent hospitals. Adoption rates for all independent hospitals grew from 48 percent in 2008 to 77 percent by 2011. Absent HITECH incentives, we estimate that the adoption rate would have instead been 67 percent in 2011. When we consider that HITECH funds were available for all hospitals and not just marginal adopters, we estimate that the cost of generating an additional adoption was $48 million. We also estimate that in the absence of HITECH incentives, the 77 percent adoption rate would have been realized by 2013, just 2 years after the date achieved due to HITECH.

Suggested Citation

  • David Dranove & Craig Garthwaite & Bingyang Li & Christopher Ody, 2014. "Investment Subsidies and the Adoption of Electronic Medical Records in Hospitals," NBER Working Papers 20553, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20553
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    Cited by:

    1. Marlow, Michael, 2017. "Should Government Subsidize Electronic Health Records?," Working Papers 06886, George Mason University, Mercatus Center.
    2. Venugopal Gopalakrishna-Remani & Robert Paul Jones & Kerri M. Camp, 2019. "Levels of EMR Adoption in U.S. Hospitals: An Empirical Examination of Absorptive Capacity, Institutional Pressures, Top Management Beliefs, and Participation," Information Systems Frontiers, Springer, vol. 21(6), pages 1325-1344, December.
    3. Maynou, L. & McGuire, A. & Serra-Sastre, V., 2019. "Exploring the Impact of New Medical Technology on Workforce Planning," Working Papers 19/07, Department of Economics, City University London.
    4. Seth Freedman & Haizhen Lin & Jeffrey Prince, 2018. "Does Competition Lead to Agglomeration or Dispersion in EMR Vendor Decisions?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(1), pages 57-79, August.
    5. Maynou, Laia & Pearson, Georgia & McGuire, Alistair & Serra-Sastre, Victoria, 2022. "The diffusion of robotic surgery: Examining technology use in the English NHS," Health Policy, Elsevier, vol. 126(4), pages 325-336.
    6. Maynou, Laia & Pearson, Georgia & McGuire, Alistair & Serra-Sastre, Victoria, 2022. "The diffusion of robotic surgery: examining technology use in the English NHS," LSE Research Online Documents on Economics 114535, London School of Economics and Political Science, LSE Library.
    7. Ghandour, Ziad & Siciliani, Luigi & Straume, Odd Rune, 2022. "Investment and quality competition in healthcare markets," Journal of Health Economics, Elsevier, vol. 82(C).
    8. Seth Freedman & Haizhen Lin & Jeffrey Prince, 2018. "Information Technology and Patient Health: Analyzing Outcomes, Populations, and Mechanisms," American Journal of Health Economics, MIT Press, vol. 4(1), pages 51-79, Winter.
    9. Elisabet Rodriguez Llorian & Gregory Mason, 2021. "Electronic medical records and primary care quality: Evidence from Manitoba," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1124-1138, May.
    10. Yanfei Wang, 2022. "Competition And Multilevel Technology Adoption: A Dynamic Analysis Of Electronic Medical Records Adoption In U.S. Hospitals," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 1357-1395, August.

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I1 - Health, Education, and Welfare - - Health
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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