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Testing the causal direction between profitability and investment in health information technology
Amar M.Y.
International Journal of Business Research
Abstract
ABSTRACT Earlier studies have shown a positive correlation, i.e., higher profitability seemed to be correlated with higher HIT investments. The causal direction, however, remained unclear. This paper investigates possible correlations between the profitability of a healthcare organization and their decision regarding Healthcare Information Technology (HIT) investments. A variety of experiments were then conducted to explore the question how different profitability levels and trends affect management's inclination to increase or decrease the HIT budget. This study used an experimental study and market basket analysis method. The results showed that (i) a higher level of profitability,(ii) an increasing profitability trend, and (iii) an increasing HIT budget trend all have a significant positive affect on test subjects' willingness to spend money on HIT. The positive correlation between HIT investments and profitability shown thus seems at least partly due to the greater willingness of successful healthcare facilities to spend more money on HIT. Keywords Healthcare Information Technology, Profitability, Investment, Experimental Study, Market Basket Analysis