Academic journal article Journal of the Association for Information Systems

The Effects of the Assimilation and Use of IT Applications on Financial Performance in Healthcare Organizations

Academic journal article Journal of the Association for Information Systems

The Effects of the Assimilation and Use of IT Applications on Financial Performance in Healthcare Organizations

Article excerpt

Abstract

This research examines the impacts of the assimilation and use of IT on the financial performance of hospitals. We identify two dimensions of IT assimilation and use. They are the IT applications architecture spread, which is the adoption of a broad array of IT solutions, and IT applications architecture longevity, which is the length of experience with use of specific IT solutions. We examine the extent to which these dimensions of assimilation within the business and clinical work processes impact hospital performance. Compared with the effects of IT applications architecture spread, we find that the IT applications architecture longevity has a more significant effect on financial performance. In addition, the effects of assimilation manifest differently across the business and clinical process domains. Our results enhance understanding about the manner in which the assimilation and use of IT contributes to the financial performance of hospitals.

Keywords: Health Care, Synergies, Enterprise IT Architectures, Financial Performance, IT Value.

(ProQuest: ... denotes formulae omitted.)

1. Introduction

Information technology is regarded as a significant lever for enhancing the performance of healthcare organizations.1 Therefore, policy makers in the US and other countries have taken steps to facilitate the effective assimilation and use of IT in these organizations. In an acknowledgement of the strategic importance of IT, researchers have begun to examine the relationship between IT investments and the financial performance of healthcare organizations (Menon, Lee, & Eldenburg, 2000; Menon, Yaylacicegi, & Cezar, 2009). Conceptualizations about the business value of IT have identified the different processes and mechanisms through which IT impacts firm performance (Sambamurthy, Bharadwaj, & Grover, 2003; Barua & Mukhopadhayay, 2000). However, there is a need for empirical research that provides a more detailed calibration of the impact of IT on healthcare performance.

Researchers have examined the effects of information technology on firm performance in other industries (Bharadwaj, Bharadwaj, & Konsynski, 1999; Melville, Kraemer, & Gurbaxani, 2004; Mittal & Nault, 2009). Results from these studies suggest that the impacts are based on the portfolio of IT applications being used by a firm (Aral & Weill, 2007; Dehning, Richardson, & Zmud, 2003). These studies indicate that the performance impacts of IT applications vary across different categories of applications. Other research has argued that the assimilation and use of IT has an important role in enhancing firm performance (Devaraj & Kohli, 2003). Assimilation refers to the extent to which information technologies are being used within the key processes and activities in organizations (Cooper & Zmud, 1990). Devaraj & Kohli (2003) argue that the performance benefits of IT may not fully materialize unless those technologies are actually being assimilated and used. Assimilation is particularly important not only because the levels of IT assimilation are generally low in most firms (Fichman & Kemerer, 1997), but also because it reflects an organization's experience with managing and mastering the complex mutual adaptation processes for the organizational use of IT (Purvis, Sambamurthy, & Zmud, 2001; Leonard-Barton, 1995).

Our research examines how the assimilation and use of IT impacts the performance of healthcare firms. Earlier studies of assimilation have focused either on specific technologies (e.g., Fichman & Kemerer, 1997; Angst & Agarwal, 2009), or their degree of use in specific business processes and activities (Armstrong & Sambamurthy, 1999; Pavlou & El Sawy, 2006; Ray, Muhanna, & Barney, 2005). In contrast, our research focuses on the assimilation and use of a broad array of health information technologies. We draw upon the Ross, Weill, and Robertson (2006) conceptualization of enterprise architectures to examine the effects of two novel dimensions of IT assimilation and use. …

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