To outsource or not to outsource

Hospital process performance and the adoption of medical devices: An organization-based view

Over the past two decades, there has been a growing scholarly interest in the adoption of technology in healthcare. While numerous studies have delved into the effects of specific technologies on the performance of different organizational units and medical specialties, the findings have often been divergent. Unlike the established literature, our approach focuses on the organization's perspective to analyze how technology impacts process performance in hospital settings. More precisely, we compiled a tailored dataset from 56 healthcare organizations in Italy and conducted a comprehensive analysis of panel data from 2016 to 2019, utilizing Ordinary Least Squares (OLS) regression as our main analytical tool. The data shows a clear relationship between an organization's use of medical devices and its overall process performance. Our research highlights the importance of achieving substantial improvements in process performance by strategically integrating new technologies and devices. Policymakers are encouraged to consider introducing incentives to drive hospitals to invest in innovative technologies. Furthermore, monitoring expenditures on new devices could serve as a valuable metric for assessing the extent of technology adoption within clinical practices.

Exploring information systems outsourcing in U.S. hospital-based health care delivery systems

The purpose of this study is to explore the factors associated with outsourcing of information systems (IS) in hospital-based health care delivery systems, and to determine if there is a difference in IS outsourcing activity based on the strategic value of the outsourced functions. IS sourcing behavior is conceptualized as a case of vertical integration. A synthesis of strategic management theory (SMT) and transaction cost economics (TCE) serves as the theoretical framework. The sample consists of 1,365 hospital-based health care delivery systems that own 3,452 hospitals operating in 2004. The findings indicate that neither TCE nor SMT predicted outsourcing better than the other did. The findings also suggest that health care delivery system managers may not be considering significant factors when making sourcing decisions, including the relative strategic value of the functions they are outsourcing. It is consistent with previous literature to suggest that the high cost of IS may be the main factor driving the outsourcing decision.

Nonpatient revenues in hospitals

BACKGROUND

Health management studies of hospital revenues have tended to focus on patient-service revenues, with little attention to the magnitude and the nature of nonpatient revenues.

OBJECTIVES

This study (a) examines the size and sources of nonpatient revenues in hospitals, (b) analyzes the impact of nonpatient revenues on hospital profit margins, and (c) investigates variations in nonpatient revenues by ownership and bed size.

DATA AND METHODS

The data source for this study is the Florida Hospital Uniform Reporting System. The unit of observation is a private, acute care hospital, with the data being averaged over the period 2003-2005 (n = 143). Descriptive statistics and nonparametric tests of differences between groups are the primary methods of analysis.

FINDINGS

During the period 2003-2005, on average, other operating revenues accounted for 1.3% and nonoperating revenues accounted for 4.1% of total revenues, although there was considerable variation across hospitals. Nonpatient activities contributed importantly to hospital profit margins. The average patient care margin was 3.1%, and the average total margin before tax was 4.8%. Thus, without nonpatient activities, total margin before tax would have been 1.7 percentage points lower. Nonpatient revenues tended to be more important for not-for-profit compared with for-profit hospitals, with little differences by bed size.

PRACTICE IMPLICATIONS

The key practice implication is that because nonpatient activities contribute importantly to hospital profit margins, they should constitute a core element in the organization's financial and operational planning. In particular, hospitals should consider treating nonpatient activities as profit centers.

Planning for Hospital IT Implementation: A New Look at the Business Case

Compared to organizations in other industries, hospitals are slow to adopt information technology (IT). Those planning for system implementation must understand the barriers to IT adoption which, in healthcare, include the relatively high acquisition and maintenance costs of sophisticated administrative and clinical information systems. Understanding the overall business case is particularly important for hospital IT planners. This paper describes the literature that examines benefits from using health IT. In addition, we focus on a series of studies conducted in Florida that provide generalizable evidence regarding the overall business case associated with hospital adoption for information systems. These studies focus broadly on the improved financial, operational, and clinical performance associated with IT.

The effect of information technology investment on firm-level performance in the health care industry

BACKGROUND

The return on investment for information technology (IT) has been the subject of much debate throughout the history of management information systems research. Often referred to as the productivity paradox, increased IT investments have not been consistently associated with increased productivity. Understanding individual IT factors that directly contribute to business value should provide insight into the productivity paradox.

PURPOSE

The effects of 3 different firm-level IT characteristics on financial performance in the health care industry are studied. Specifically, the effects of IT budget, IT outsourcing, and the relative number of IT personnel on firm-level financial performance are analyzed.

METHODS

Regression analysis of archival survey data for 914 Integrated Healthcare Delivery Systems is performed.

RESULTS

IT budgetary expenditures and the number of IT services outsourced are associated with increases in the profitability of Integrated Healthcare Delivery Systems, whereas increases in IT personnel are not significantly associated with increased profitability. Each one tenth of a percentage increase in IT expenditures is associated with approximately $100,000 in increased profit, and each additional IT service outsourced is associated with approximately $950,000 in increased profit for an average-sized Integrated Healthcare Delivery System.

IMPLICATIONS

To increase profitability, IT administrators should increase IT budgetary expenditures along with IT outsourcing levels. IT administrators in the health care industry can use such findings during budgeting cycles to justify increased investments in IT personnel as being budget neutral while increasing organizational capacity.