Strategic use of health information exchange and market share, payer mix, and operating margins

Abstract

Background: Health information exchange (HIE) capabilities are tied to health care organizations' strategic and business goals. As a technology that connects information from different organizations, HIE may be a source of competitive advantage and a path to improvements in performance. Purpose: The aim of the study was to identify the impact of hospitals' use of HIE capabilities on outcomes that may be sensitive to changes in various contracting arrangements and referral patterns arising from improved connectivity. Methodology: Using a panel of community hospitals in nine states, we examined the association between the number of different data types the hospital could exchange via HIE and changes in market share, payer mix, and operating margin (2010-2014). Regression models that controlled for the number of different data types shared intraorganizationally and other time-varying factors and included both hospital and time fixed effects were used for adjusted estimates of the relationships between changes in HIE capabilities and outcomes. Results: Increasing HIE capability was associated with a 13 percentage point increase in a hospital's discharges that were covered by commercial insurers or Medicare (i.e., payer mix). Conversely, increasing intraorganizational information sharing was associated with a 9.6 percentage point decrease in the percentage of discharges covered by commercial insurers or Medicare. Increasing HIE capability or intraorganizational information sharing was not associated with increased market share nor with operating margin. Conclusions: Improving information sharing with external organizations may be an approach to support strategic business goals. Practice implications: Organizations may be served by identifying ways to leverage HIE instead of focusing on intraorganizational exchange capabilities.