In a recently published study my co-author and I examine the impact of regulatory change on technology implementation and use. The findings show that the seeds for structural change necessitated by regulatory changes are cultivated very early in the decision making sequence. The pivotal role of the length of IT planning horizon and frequency of steering committee meetings in broadening the scope of IT plans is evident in the results. Hospitals that have a longer IT planning horizon go beyond myopic technical and cost issues. This helps in creating a broader scope of IT plan. Hospitals with more frequent steering committee meetings will have higher engagement in fulfilling the IT plans and additional opportunities to ask questions and receive help on any implementation issues. Additionally, meetings keep priorities at the forefront of a person’s thoughts, so that solutions and time spent on implementation is increased. The scope of IT plans forms the basis for technology appropriation within the contextual environment set by the choice of IT adoption strategy.
The findings show that hospitals with a broader scope of IT plan are able to fulfill meaningful use requirements when they use best-of-suite strategy. Meanwhile, the association between the scope of IT plan and achievement of meaningful use requirements in the top quartile is absent for those hospitals that rely on single-vendor or best-of-breed strategies. These results highlight the risks involved with using a single-vendor or best-of-breed strategy and suggests that hospitals could be constrained by vendor’s capabilities for successfully integrating all of the IT applications. Centralized and decentralized IT strategies such as the single-vendor or best-of-breed adoption strategies may lead to sub-optimal rationalizing such that an organization settles for what may integrate with their current set of applications or vendor capabilities. As the breadth of IT applications grows, a decentralized organization may find it difficult to adapt their applications to meet new or updated requirements. Similarly, a centralized organization may find that their vendor is not capable of quickly implementing new or updated requirements, which will delay achievement of strategic objectives, like the meaningful use mandates and the associated reimbursements from the HITECH Act. Since the best-of-suite adoption strategy emphasizes integration among various information systems within a hospital, the appropriation of technology is more efficient than the single-vendor and best-of-breed strategies. The dynamic nature of the healthcare environment has resulted in an increase in managed-care contracts in hospitals, which calls for finding appropriate mechanisms for risk-sharing and ensuring financial stability. It is therefore important to find appropriate mechanisms to structure IT to ensure that IT adoption is not disruptive to the overall functioning of hospitals.
The findings suggest that the best-of-suite adoption strategy allows adaptive changes to technology while it is in use and thereby aids in aligning complex hospital IT applications to achieve the top quartile of meaningful use requirements. As hospitals fulfill the requirements set in various stages of meaningful use as stipulated in the HITECH Act, they receive payments from the federal government. To examine the financial impact of fulfilling meaningful use requirements, we compared federal payments received by hospitals in the top 10% fulfilling meaningful use requirements with those who received payment in the bottom 10%. We find hospitals in the top 10% receive on average $2,209,679 more in federal financial incentives than those in the bottom 10%. Additionally, ANOVA results show significant difference in terms of meaningful use payments for hospitals adopting single-vendor, best-of-breed, and best-of-suite strategies [F(2, 524) =5.78, p= 0.01]. A Tukey post-hoc test confirmed that payments to hospitals with the best-of-suite adoption strategy are higher than those with single-vendor (p < 0.01) and best-of-breed (p < 0.10) adoption strategies. A hospital with a best-of-suite adoption strategy can expect an additional payment ranging from $425,732.10 to $659,593.00 than hospitals using a single-vendor adoption strategy during the first year of completing meaningful use requirements. Since the Phase I meaningful use payments are paid out over four years at 100%, 75%, 50% and 25%, respectively, the benefits increase substantially to $1,064,330.25 to $1,648,982.50 over the course of four years. Similarly, hospitals with a best-of-breed strategy can expect up to $378,208.20 less than hospitals with a best-of-suite strategy during the first year of completing meaningful use requirements. This could lead to $945,520.50 less in meaningful use payments spread out across four years. These results provide a compelling reason for hospitals to carefully consider their IT planning structure and adoption strategies.