Background—Hospital information Technology

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The development of EMR systems has greatly expanded the automation of clinical services.
These systems replace a hospital’s medical record and integrate clinical information from ancillary services such as pharmacy, radiology, and laboratory. More sophisticated systems allow
physicians to directly access the electronic medical record and enter orders electronically. Computerized providers order entry (CPOE is intended to reduce communication errors and serve asa platform for treatment guideline automation. Although leading academic medical centers have been developing these technologies for many years, it is only during the past decade that these technologies began to diffuse widely.

🔀 Information technology can affect hospital productivity through a variety of mechanisms.
Although hospitals may gain the same benefits from IT as any other service firm (e.g., improved
supply chain management or enhanced labor productivity), three mechanisms are particularly
important for hospitals: billing management, provider monitoring, and clinical decision support.
Improved billing may be the most widespread effect of hospital IT investments.
Hospitals provide a wide range of services, and the prices of these services depend upon patients’ clin￾ical characteristics as well as contracts negotiated between payers and providers. For example,
the reimbursement rate for cardiac surgery often depends upon whether a patient is a diabetic
or has hypertension, as these comorbidities affect hospital costs. Price schedules and clinical
documentation requirements depend on contracts with private insurers as well as government
regulations. Although hospitals have long employed conventional IT for billing support, EMRs
are increasingly used to document care and facilitate charge capture.
Clinical complexity also creates a difficult monitoring problem. Although physicians control
most hospital resources, their actions are difficult to document and evaluate. Furthermore, most
physicians are employed by physician-owned practices rather than hospitals. Hospitals use IT
to monitor physician behavior. Relatively simple clinical information systems may be used to
generate periodic reports on physician behavior and resource utilization. These reports may be
used to support quality improvement initiatives or to identify the overuse of laboratory and radiology resources. Comprehensive EMR systems allow for much more sophisticated provider monitoringand may lead to improved resource allocation within hospitals.Clinical decision support is the most ambitious objective of hospital IT.

Sophisticated EMR system with CPOE may be used as a platform to implement treatment guidelines, identify dangerousdrug interactions, or coordinate care across provider team members. These real-time decision support functions should standardize care and reduce errors, thus enhancing both clinical qualityand productivity.
Decision support systems are more effective when they possess detailed information regard￾ing patients’ clinical characteristics and treatment histories. Thus, EMRs may exhibit network
externalities as their value could increase if neighboring providers adopted interoperable EMRs.
Although many hospitals engage in information exchange, only 14% of California hospitials
electronically exchange medical record information with competing hospitals by the end of our
study period 8. Most of these productivity-enhancing mechanisms should be captured by conventional mean sures of value-added. Quality changes may, however, be omitted from value-added if they do not lead to increases in prices or quantities. This may be important for hospitals as quality is difficult to measure and the prices for many patients (i.e., Medicare beneficiaries) are fixed by law.