Does Information Technology Increase or Decrease Hospitals' Risk? An Empirical Examination of Computerized Physician Order entry and Malpractice Claims

Information technology (IT) has significant potential to improve the quality of patient care, to lower costs, and to improve efficiency. However, IT leaves an electronic paper trail that may demonstrate negligence and thereby create legal risk. Emerging research suggests that this fear of electronic discovery is delaying IT adoption, thereby perpetuating inefficiencies. Is this fear founded? If it is, then policy changes are needed to remove this obstacle to streamlining the healthcare system. If not, then healthcare providers should move ahead to realize IT benefits without being stymied by irrational fears. We examined the relationship between Computerized Physician Order Entry (CPOE) and malpractice claims against hospitals in Florida between 1999 and 2006. CPOE reduces the number, severity, and disposition time of claims, while having no effect on the amounts paid. This indicates that CPOE reduces hospital legal risk, suggesting that fears of increased legal risk due to IT are unfounded.