In the article “Does IT Improve Revenue Management in Hospitals?”, authors Qi and Han investigated the impact of IT systems on revenue management in hospitals. They argue that in the literature, writers who have addressed this issue have concluded that the effective use of IT can help improve organizations’ operational and financial strength (Qi & Han, 2020). The primary benefits of using IT systems in hospitals can include increased quality of care and reduced operating costs. Importantly, the authors argue that the influence of IT systems will ensure the sharing of information on regional health care costs. However, the article indicates that the implications of IT on the productivity equation in the medical field have not been sufficiently investigated.
It should be noted that the U.S. health care system has a complex set of rules that determine how an organization can manage its expenses and revenues. For example, there are cases where hospitals provide services that they are not compensated for, such as assistance to low-income people. However, to some extent, organizations can regulate the pricing of their services. This is because hospitals often have insurance plans that reimburse patients according to a defined price for a particular diagnosis (Qi & Han, 2020). It can be concluded from this that hospitals are limited in regulating their profits and establishing prices for treatment services for the public.
It is significant to mention that non-profit hospitals cannot deny patients treatment if they do not have an insurance plan, and the author of the article notes this is 87% of all beds in the United States (Qi & Han, 2020). Accordingly, Qi and Han remark that this creates a financial challenge for health care providers and limits their profits. However, these losses are often compensated for by alternative funding sources, such as private donations or subsidies from the government. Thus, revenue management is a crucial part of effective hospital operations.
The authors of the article indicate that a review of the literature suggests that IT can improve various aspects of hospital operations. Therefore, they are interested in researching the role of IT systems in hospital revenue management. This will assist hospitals in solving problems by providing health care services that patients are not taxing. The article states that implementing IT systems in hospitals can be done gradually for medical staff to use the system for long-term effect (Qi & Han, 2020). Qi and Han used two secondary sources to collect data on hospital financial data and conducted an empirical analysis to establish the relationship between IT investment and revenue management.
The secondary sources are information from the Health Information and Management Systems Society (HIMSS) and hospital-level data from the California Office of Statewide Health Planning and Development (OSHPD). The authors summarized the results of the empirical analysis and indicated that investments in IT systems have positive short-term and long-term financial management benefits (Qi & Han, 2020). At the same time, their implementation reduces the amount of medical care that hospitals are not compensated for. The authors found that more hospitals make more extensive use of IT systems, and because of this, they receive more advantages.
The article stated that hospitals face many challenges when deciding to invest in IT. For instance, there are many health information technologies, which is why it is necessary to choose the most appropriate one for the hospital’s needs. In general, hospital IT systems can be divided into IT systems for business, used to bill patients automatically. At the same time, clinical IT systems, such as cardiology and revenue management information systems for hospitals (Qi & Han, 2020). They focus on pharmacy and laboratory management, which are used to help health care providers treat patients.
The authors of this article suggest that hospital-wide performance measures are essential to revenue management. Moreover, alternative indicators, such as cost and profitability, should be considered, even if they depend on insurance reimbursement. Qi and Han argue that clinical IT systems contribute to efficiency because they assist healthcare providers in making diagnoses and modernizing care (Qi & Han, 2020). Moreover, investments in IT affect and make patient care more efficient; therefore, it helps generate more revenue. The article notes that investments in IT can return in the long run because organizational process adaptation needs to occur initially. Indeed, in the initial stages of implementation, IT can decrease an organization’s efficiency. For example, using EMR results in higher health care costs and lower provider performance (Qi & Han, 2020). Although the authors mention that in the long run, IT systems contribute to the fact that hospitals reduce uncompensated care expenses, this is accomplished by obtaining fast insurance information and patient records.
At the same time, IT systems ensure accounts receivable management and the creation of a convenient payment system. Another positive feature of implementing an IT system is the ability to find alternative mechanisms for financing patient care. For instance, such methods include identifying subsidies and additional resources to create low-income patients. Qi and Han observe that IT can improve hospital operations by collecting a higher percentage of revenue from patients (Qi & Han, 2020). This empirical analysis supports the hypotheses about the positive impact of IT investment on revenue management performance.
Notably, the authors found that larger hospitals have better human and administrative resources. Consequently, they can achieve the benefits of IT investments faster and at a lower expense. Thus, the article indicates that this contributes to positive synergies between IT investment and hospital scale. Qi and Han determined that non-profit hospitals are not sufficiently motivated compared to physicians from for-profit hospitals to adopt new systems (Qi & Han, 2020). This is because employees from non-profit hospitals do not want to spend time adapting and training for process re-engineering.
The significance of the study is that it explains the advantages of IT for hospital management efficiency and cost coverage. The authors established that in order to use IT systems effectively, a learning curve for physicians should be achieved (Qi & Han, 2020). This will accelerate their process of adapting to the new IT system. Accordingly, after the transition period of IT implementation, the hospital will receive benefits in the form of enhanced revenues.
It is valuable to highlight the key limitations of the article, which is that the application of observation data inevitably tends to be endogenous, which does not allow for clearly established cause-effect relationships. At the same time, the authors do not indicate specific mechanisms that influence the achievement of positive results of IT system implementation in the financial sector of hospitals. Thus, future research should focus on the specific organizational mechanisms that describe organizations’ realization of IT systems. It is also significant that future studies should use quarterly reports rather than 10-year reports (Qi & Han, 2020). This will provide a detailed assessment of the effect of the IT system on improving revenue management.
Qi, K., & Han, S. (2020). Does IT improve revenue management in hospitals? Journal of the Association for Information Systems, 21(6), 7. Web.