Information technology payoff in the health-care industry: A longitudinal study

With the enormous investments in Information Technology (IT), the question of payoffs from IT has become increasingly important. Organizations continu e to question the benefits from IT investments especially in conjunction wi th corporate initiatives such as business process reengineering (BPR). Furt hermore, the impact of technology on nonfinancial outcomes such as customer satisfaction and quality is gaining interest. However, studies examining the IT-performance relationship have been far fr om conclusive. The difficulty in identifying impacts from technology has be en the isolation of benefits of IT from other factors that may also contrib ute to organizational performance. Furthermore, benefits from technology in vestments may be realized over an extended period of time. Finally, IT bene fits may accrue when they are done in concert with other organizational ini tiatives such as business process reengineering. This calls for studies tha t take into account control variables as well as data that span time period s. In this study, we examine monthly data collected from eight hospitals over a recent three-year time period. We specify propositions that relate invest ments in IT to performance, and the combined effect of technology and BPR o n performance. We draw upon the literature in health-care management to inc orporate appropriate control variables in the analyses. Our results provide support for the IT-performance relationship that is observed after certain time lags. Such a relationship may not be evident in cross-sectional or sn apshot data analyses. Also, results indicate support for the impact of tech nology contingent on BPR practiced by hospitals.