Does participation in health information exchange improve hospital efficiency?

The federal government allocated nearly $30 billion to spur the development of information technology infrastructure capable of supporting the exchange of interoperable clinical data, leading to growth in hospital participation in health information exchange (HIE) networks. HIEs have the potential to improve care coordination across healthcare providers, leading ultimately to increased productivity of health services for hospitals. However, the impact of HIE participation on hospital efficiency remains unclear. This dynamic prompts the question asked by this study: does HIE participation improve hospital efficiency. This study estimates the effect of HIE participation on efficiency using a national sample of 1017 hospitals from 2009 to 2012. Using a two-stage analytic design, efficiency indices were determined using the Malmquist algorithm and then regressed on a set of hospital characteristics. Results suggest that any participation in HIE can improve both technical efficiency change and total factor productivity (TFP). A second model examining total years of HIE participation shows a benefit of one and three years of participation on TFP. These results suggest that hospital investment in HIE participation may be a useful strategy to improve hospital operational performance, and that policy should continue to support increased participation and use of HIE. More research is needed to identify the exact mechanisms through which HIE participation can improve hospital efficiency.