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The Effects of Health Information Technology on the Costs and Quality of Medical Care

By Leila Agha


Information technology has been linked to productivity growth in a wide variety of sectors, and health information technology (HIT) is a leading example of an innovation with the potential to transform industry-wide productivity. This paper analyzes the impact of HIT on the quality and intensity of care delivered to Medicare inpatients. Building an organizational model, I show how the adoption of HIT may improve patient health and may either increase or decrease medical expenditures. Using Medicare claims data from 1998-2005, I estimate the effects of HIT by exploiting variation in hospitals’ adoption statuses over time, analyzing 2.5 million inpatient admissions across 3900 hospitals. HIT is associated with an initial 1.3 % increase in billed charges, and there is no evidence of cost savings, even five years after adoption. Additionally, HIT adoption appears to have little impact on the quality of care, measured by patient mortality, medical complication rates, adverse drug events, and readmission rates. These results are robust to the addition of rich controls for pre-trends. The findings suggest that HIT is not associated with improvements in either the efficiency or quality of hospital care for Medicare patients, through five years after adoption. ∗I would like to thank David Autor, Amy Finkelstein, and Michael Greenstone for invaluable guidance throughou

Year: 2011
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