Role of Electronic Healthcare Record Adoption in Enhancing the Relationship between Quality Measures and Hospital Financial Performance

Electronic Health Records (EHRs) are designed as a real-time digital record to streamline distinctive and valuable patient information across multiple stakeholders in the healthcare delivery channel. The stakeholders include hospitals, healthcare providers and patients, as well as a myriad of third-party providers (i.e., insurance companies, Medicare). Academicians, practitioners and public policy makers are grappling with uneven experiences and empirical findings regarding the relationship between technology-enabled information sharing and the ensuing quality of healthcare outcomes. The most significant government-mandated technology is the implementation and adoption of EHR. The present research examines EHR through the lens of Resource Advantage Theory –– to empirically assess how partial and comprehensive implementation levels of EHR adoption influence quality management and financial performance of hospitals. Based on archival data attained from 210 hospitals in the state of Texas, the results indicate positive relationships between EHR and the quality of care. While it is generally recognized that EHR and quality management affect a hospital’s performance, this research investigates the moderating effect that EHR has on quality management and a hospital’s performance. These findings provide hospital administrators, practitioners, and third-party payers with an integrative and parsimonious model to understand the impact of partial and comprehensive levels of EHR implementation on the relationship of healthcare quality and hospital performance.