The Unintended Consequences of the Adoption of Electronic Medical Record Systems on Healthcare Costs

Abstract

In my dissertation, I study unintended consequences of the adoption of EMR systems. In my three essays, I examine how the adoption of EMR systems affects neighboring hospitals (spillover effects), can be used by hospitals to further its objectives in an unconventional manner (“upcoding” of patient case mix data), and how EMR adoption may end in the eventual abandonment of the system along with corresponding negative effects. In my first essay, I examine if the adoption of EMR systems has effects beyond the adopting hospital to neighboring hospitals. I find that the adoption of these systems has “spillover” effects to neighboring hospitals and that although the adoption of EMR systems leads to an increase in the operating cost of the adopting hospital, spillover effects reduce the operational cost of neighboring hospitals. In the second essay of my dissertation, I examine if an unintended consequence of the adoption of EMR systems is that there could be an increase in “upcoding” activities by hospitals. Upcoding deals with patients being diagnosed in such a manner as to increase the reimbursement of hospitals by inappropriately increasing the patient’s case mix. Using the roll-out of an auditing program as a natural experiment, I find that there is evidence to suggest upcoding by hospitals, particularly by for-profit hospitals. Finally, in the third essay of my dissertation, I examine the phenomenon of abandonment of EMR systems and find that the abandonment of EMR system leads to an increase in the operational cost of hospitals. I also examine which hospitals are more likely to abandon their EMR systems both outside and during the HITECH Act. I argue that the adoption of EMR systems often has unanticipated and unintended consequences.