Blunting Damocles' Sword: A Longitudinal Model of Healthcare IT Impact on Malpractice Insurance Premium and Quality of Patient Care

Nirup M. Menon () and Rajiv Kohli ()
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Nirup M. Menon: School of Management, George Mason University, Fairfax, Virginia 22030
Rajiv Kohli: Mason School of Business, College of William and Mary, Williamsburg, Virginia 23187

Information Systems Research, 2013, vol. 24, issue 4, 918-932

Abstract: Prior studies on the business value of information technology (IT) mainly focus on the impact of IT investments on productivity and firm profitability. Few have considered its implication on expected and actual product or service quality. This paper fills this gap by investigating the impact of past healthcare IT (HIT) expenditure on the malpractice insurance premium (MIP) and the moderating effect of past HIT expenditure on the relationship between past MIP and current quality of patient care in a longitudinal model. Based on archival panel data on costs, operations, and patient care outcomes of 66 hospitals in the U.S. state of Washington from 1998 to 2007, we find that past HIT expenditure is negatively associated with MIP, supporting our argument that HIT provides value that is anticipated by insurers and is captured by a change in MIP. We find that past HIT is positively associated with quality of patient care. We also find that past MIP is positively associated with quality of patient care, supporting the premise that hospitals respond to MIP by making risk mitigation efforts. However, we find that past HIT moderates this relationship negatively, suggesting a reliance on HIT at the expense of risk mitigation.

Keywords: business value of IT; organizational risk; hospital; dynamic panel model (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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