Hospitals' EHR savings depend on internal, local resources

There is ongoing debate over the money-saving potential of EHRs, with some research showing their ability to reduce provider costs and some showing their ability to bust provider budgets. The lack of consistency suggests past research has inappropriately framed the debate, according to an August working paper published by the National Bureau of Economic Research.   

Most research has failed to treat EHR implementation as a component of “business process innovation,” or a widespread change in operational practices that consider unique circumstances to institute a net benefit for an organization, wrote researchers led by David Dranove, MBA, a professor at the Kellogg School of Management in Evanston, Ill. These circumstances include local and internal resources.

Researchers used a variety of data sources, including HIMSS Analytics, the American Hospital Association’s Annual Survey of Hospitals and the U.S. Census, to determine how EHR implementations occurring between 1996 and 2009 affected hospital costs.

On average, they did not experience a statistically significant decrease in costs. However, hospitals with experienced internal IT teams and those in areas with a high volume of professional service firms were able to realize savings several years after implementation. Also on average, hospitals in strong IT markets experienced a 3.4 percent decrease in costs three years after implementing basic EHRs and those implementing advanced EHRs experienced a 2.2 percent decrease after three years. Hospitals in other areas failed to achieve cost savings even after several years.

“The productivity impact of EHR should depend on factors that shape the supply conditions for complements, such as the experience of a hospital’s IT staff, as well as the local labor market for skilled labor and third party software and support,” Dranove concluded.