Realizing the Value Proposition : A Longitudinal Assessment of Hospitals ’ Total Factor Productivity

U.S. hospitals are under continual pressure both to increase productivity and to improve quality through the use of Health Information Technology. This paper analyzes 3,187 US hospitals, using data reported to the American Hospital Association, to assess changes in productivity over a fiveyear period (2002-2006). The Malmquist Indices derived indicate that Total Factor Productivity (TFP) and Efficiency Change (EFFCH) both increased during that timeframe. The low Technological Change (TC) index indicates that improvements to organizational processes did not contribute substantially to productivity. A secondary analysis examined the use of Computerized Physician Order Entry (CPOE) in relationship to the three indices. TFP trended positively for those hospitals further into the CPOE implementation process.