The Impact of Health Information Sharing on Hospital Costs

Despite substantial progress in the adoption of health information technology (IT), researchers remain uncertain as to whether IT investments benefit hospitals. This study evaluates the effect of health information sharing on the cost of care, and whether the effect varies with context. Our results suggest that information sharing using health IT, specifically the extent (breadth) and level of detail (depth) of information sharing, helps to reduce the cost of care at the hospital level. The results also show that the effects of depth of information sharing on cost savings are salient in poor and less-concentrated regions, but not in wealthier, more-concentrated areas, whereas the the effects of breadth of information sharing on cost savings are equivalent across wealth and concentration. To realize the benefits of using health IT more effectively, policy makers’ strategies for encouraging active use of health IT should be informed by market characteristics.