Demand for Resource Allocation Technologies: Adoption of Hospital Surgical Management Software

Health Information Technology (IT) is an important component of healthcare reform. Health IT holds the promise of improving quality while reducing costs. The broader IT literature frequently recognizes that IT payoffs depend on complementary investments in organization and capital. We build on this literature by evaluating the drivers of hospital surgical management software (HSMS) adoption. HSMS can improve operating room (OR) capacity utilization through both scheduling centralization and scheduling pooling. We draw on both the economics and operations literature to develop a theoretical model that reflects the technological and organizational issues underlying HSMS adoption. We posit that HSMS is complementary to hospitals’ organizational and capital investments. First, HSMS’ centralization effect is complementary to the scope of specialized surgical services. Second, HSMS’ pooling effect is complementary to the number of ORs. We test our hypotheses using a comprehensive dataset of hospitals’ characteristics and application-level technology adoptions – data not frequently available in other industries. We estimate proportional hazard models to test our hypotheses. We find that both factors are important HSMS adoption determinants. These results demonstrate the importance of understanding the mechanisms through with different types of IT create value. Our findings further suggest that efficient health IT policies require an understanding of individual technologies within an organizational context.