Assessing Ambulatory HIT Spillover Effects on Hospital Inpatient Costs,

To understand the HIT spillovers, we propose a healthcare referral network model that illustrates referral directions between and within different provider types. We model spillover effects of ambulatory EHR adoption on the inpatient cost of neighboring hospitals. Leveraging on a nationwide sample of 2,768 US hospitals across 13 years, matched with approximately 30,000 ambulatory care entities, we find that focal hospital's inpatient cost per discharge decreases as EMR adoption by neighboring ambulatory entities increases. Further, we observe that the effects are stronger in urban, densely populated regions with more ambulatory entities, and when the focal hospital and ambulatory entities are proximal and belong to the same health system. These findings reveal patient sharing and health information exchange as the underlying mechanisms. Our referral network model in conjunction with empirical evidence on the business value of information exchange can propagate a culture of sustained cooperation among providers.