The association of hospital profitability and digital maturity – An explorative study using data from the German DigitalRadar project

Abstract

IntroductionGerman hospitals largely rely on public investments for digitization. As these have been insufficient, hospitals had to use own profits to foster digital transformation. Thus, we assess if profitability affects digital maturity, and what other factors might be influential. MethodsWe use digital maturity data from the DigitalRadar (DR) project (2021) and financial statement data from the Hospital Rating Report from 2017 to 2019 (n = 860). We run linear regressions with the DR-score (continuous variable from 0 to 100) as dependent and three-year average EBITDA margin as independent variable. Besides, we conduct subgroup analyses stratifying by chain size. ResultsA one percentage point EBITDA margin increase is associated with a 0.359 points DR-score increase (p<0.01). This relationship holds in significance and holds or increases in magnitude for all specifications except when adding chain beds (0.212 point DR-score increase, p<0.05). Besides, chain membership and chain size are positively and significantly associated with hospitals’ DR-score. EBITDA margins of the subgroups “large chains” and “Big 3″, i.e., the three largest chains, were strongly associated with the DR-score (2.685 and 3.197 points DR-score increase respectively, p<0.01). ConclusionsHigher profitability is associated with higher digital maturity. Larger chains are digitally more mature, because (1) they might follow a chain-wide IT-strategy, (2) can standardize IT-architecture, and policies and (3) might cross-finance investments.