IMPACT OF EHR IMPLEMENTATION IN NURSING HOMES ON FINANCIAL PERFORMANCE

Abstract

Abstract Nursing homes (NHs) are a critical part of the US healthcare system providing care to the sick and fragile elderly, and research suggests that they can benefit from the implementation of health information technology (HIT). However, for multiple reasons—exclusion from HITECH incentives; limited financial wherewithal; hazy return on investments (ROI), they have lagged in HIT implementation compared to other significant components of the US healthcare system. Utilizing the resource-based view (RBV) of the firm, the purpose of this study was to examine the longitudinal impact of HIT on NH financial performance potentially building a sustainable economic argument for its implementation. To examine this relationship, we merged data from five different sources between the years 2009-2013-: Health Information and Management Systems Society, LTCFocus, Online Survey Certification and Reporting/Certification and Survey Provider Enhanced Reporting, Area Health Resource Files, and Medicare Cost Reports. The outcome variable was financial performance which was measured in four ways: operating cost and revenue, operating margin, and total margin. The independent variable of interest was HIT implementation and was measured using a novel HIT Adoption Score (HAS) reflecting NH implementation of five different HIT applications. Four separate multivariate linear regression models were estimated, and we included a series of organizational and market characteristics in the analyses. We report a positive association between NH implementation and improved profitability (operating margin) (p≤0.01), and lower operating cost (p≤0.05). Our results, suggesting a potential business case for EHR implementation within NHs, have important policy and managerial implications that are discussed.