“How to Save a Life” (and Maybe Money): The Effects of Information Technology on Health Spending During Economic Downturns

Abstract

This paper investigates the effects of information technology on health care spending per capita during economic downturns. Information technology has the potential to create substantial savings to health care spending, especially during economic downturns, when private health care spending and capital investments decline and federal spending for health care rises. I distinguish between supplier- and consumer-facing information technology by looking at health information technology systems on the supplier side and iPhones on the consumer side. Among health information technology systems, I focus on Electronic Medical Records systems and Clinical Decision Support systems. I find that health information technology systems are associated with a 14.5% rise in health care spending per capita, reflecting an increase in costs to medical facilities. However, the rise in health spending associated with health information technology use falls 2.41% for every percentage point increase in the unemployment rate. I do not find a significant relationship between consumer-facing information technology and health care spending.