Technological Transformation in Health Care: The Impact of Electronic Medical Records on Quality and Cost of Care in California

Abstract

The widespread adoption of health information technology, in particular the use of electronic medical records (EMR), has become a top priority in improving the quality and efficiency of health care in the United States. Most recently, the 2009 Health Information Technology for Economic and Clinical Health Act allocated $27 billion in subsidies to incentivize providers to adopt EMR. Although EMR systems have received significant positive attention for their benefits in leading hospitals within the health care industry, few studies have examined the effects of the use of EMR on quality and cost of care for the average adopting hospital. The few studies that have analyzed EMR usage across a variety of hospitals have shown inconsistent returns to adoption. I use both discharge-level and hospital-level data to examine the impact of hospital EMR adoption on the quality and costs of health care in California from 2008 to 2011. I find that hospital EMR adoption leads to higher risk-adjusted mortality rates immediately upon adoption, reflecting a reduction in quality, but that this impact attenuates one year after adoption. A stratified patient analysis suggests that this decrease in quality is particularly strong for patients who are non-black and who have non-chronic and less severe illnesses, suggesting that minority patients and sicker patients benefit relatively more from EMR adoption. An analysis on a number of other quality- and cost-related outcomes suggests that increased intensity of treatment is driving the decrease in quality. Overall, I conclude that health information technology policy that is mindful of the delay in the returns to EMR usage is essential in establishing meaningful and practical benchmarks for the progress of adoption. Researchers and policymakers should continue to seek to understand the nuances in how EMR is implemented in order to encourage the establishment of well-functioning and feasible EMR systems. Keywords: Information Technology, EMR, Inpatient Mortality, Quality, Costs, Event Study