Resistance to Information Technologies in the Health Care Industry

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• Resistance to Information Technologies in the
  Health Care Industry
• Maurizio Iacopetta
• Georgia Institute of Technology
• School of Economics
• E-mail maurizio.iacopetta_at_econ.gatech.edu

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Motivation

• The US health Care industry is adopting
  electronic medical records systems at a
  surprisingly low rate

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Inpatient Computer-Based Patients' Records
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Inpatient Computerized Physician Order Entry

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Use of Computer-Based Patients' Records

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International Comparison
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Source Authors elaboration based on BEA data
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WHY?

• Literature Review

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Literature Review Explanation 1

• Hospitals and physicians lack the necessary
  financial resources to adopt an expensive new
  technology

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Literature Review Explanation 2

• The cultural environment of the medical
  community is not open to information technology

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Literature Review Explanation 3

• A large fraction of benefits that arise from
  lowering the frequency of medical errors go to
  the insurers and to the patients, while hospitals
  face the cost of purchasing expensive
  technologies.

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Why is it an interesting issue for an Economist?

• Economists and Economic Historians have wondered
  why Information Technologies have not spread at
  the same pace as other general purpose
  technologies, such as electricity

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My Approach

• Use a simple methodology that weighs costs and
  benefits of adopting a new technology

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Benefits from current technology (paper-based)
Accumulation of Human Capital
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h(t)
Time (t)
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Cost of Switching (Temporary) Loss of Human
Capital
1
h(t)
h(t)
Fixed cost
T
Time (t)
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Costs and Benefits Productivity before and after
switching time T.
a
a
ah(t)
ah(t)
T
Time (t)
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A New Hypothesis

• IT reduces lower (labor) productivity for the
  short run
• Firms that adopt IT give up part of their output
  today to have a larger output tomorrow
• Hospitals have a very limited capacity to adjust
  the flow of production

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• Parameters r5 lambda0.03 Output Target
  Rate0.02 a1 a'1.2 h(0)0.5 kai0.18
  Optimal T 14 Constrained Optimal T24

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Solution

• If the problem is the tyranny of physicians
  time, hospitals would need to be able to
• Trade their services (i.e. redirect patients)
• Borrow and Lend time

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Conclusion

• 1) Industry Level Data and Survey data suggest
  that the health care industry is lags behind
  other intensive-information industries in the
  adoption of Information Technologies
• 2) Financial Constraints Culture Resistance
  Misalignment of Incentives are the three main
  explanations

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Conclusion

• 3) A new hypothesis It rests on the nature of
  the service health care.
• It is not feasible to reduce the service below a
  minimum level

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Policy Implications

• Although financial incentives might induce
  hospitals to accelerate the installation of new
  systems, they cannot stop the medical community
  from using paper and pencil instead of
  information technologies.

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Discussion Further Research

• If the physicians lack of time is the real
  issue, can the government elaborate a
  coordination mechanism?
• If European Countries are succeeding, why it is
  so?