Scratch Where It Itches: Electronic Sharing of Health Information and Costs

The electronic sharing of health information holds the potential to enhance communication and coordination among hospitals and providers, ultimately leading to improved hospital performance. However, despite the benefits, hospitals often encounter significant challenges when it comes to sharing information with external parties. Our study aimed to identify the circumstances under which sharing information with external parties can result in changes in overall hospital costs, with a particular emphasis on various obstacles that hospitals may encounter, including lack of incentives or capabilities essential to facilitate effective information exchange. To achieve this goal, we obtain data from multiple sources, including the American Hospital Association (AHA) annual and IT surveys, the Center for Medicare and Medicaid Services (CMS) hospital compare dataset, and the Census Bureau’s small-area income and poverty estimates. Consistent with previous research, we observed a significant reduction in hospital costs when information was shared internally but not externally. However, our findings also revealed that the sharing of health information can lead to cost savings for hospitals when they encounter challenges such as the absence of incentives and capabilities regardless of whether the information is shared internally or externally. The implication of our study is simple but strong: perseverance and effort yield positive outcomes. Only when hospitals push through challenges related to sharing information can they achieve the anticipated advantages of information sharing. Based on our results, we suggest that policymakers should strategically target hospitals and providers that face challenges in sharing health information rather than focusing on those without obstacles. This targeted approach can significantly increase policy efficiency, and we emphasize the need for policymakers to address the specific areas where hospitals and providers encounter difficulties. By doing so, they can effectively “scratch where it itches” and address the core issues hindering the successful exchange of health information.