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The Business Value of Health Information Technology: Towards a

Multidimensional Perspective

Conference Paper  in  Academy of Management Annual Meeting Proceedings · August 2016

DOI: 10.5465/AMBPP.2016.218

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10.5465/AMBPP.2016.218

THE BUSINESS VALUE OF HEALTH INFORMATION TECHNOLOGY:

TOWARDS A MULTIDIMENSIONAL PERSPECTIVE
STAVROS POLYKARPOU
Judge Business School
University of Cambridge
Cambridge, United Kingdom
MICHAEL BARRETT
University of Cambridge
EIVOR OBORN
University of Warwick

TORSTEN OLIVER SALGE

RWTH Aachen University
RAJIV KOHLI
The College of William & Mary

ABSTRACT

We develop a multidimensional perspective of the business value of health IT, using

insights from two inductive case studies at two hospitals within the English National Health
Service (NHS). We contribute to IT business value research by alerting scholars to the
usefulness of extending their focus towards multidimensional IT value contributions.

INTRODUCTION

For more than two decades, research on business value of information technology (IT)
has highlighted how organisations are able to create greater value from IT investments
(Grover and Kohli, 2012). The primary focus has been on the operational and economic value
of IT, with key importance attached to productivity and profitability, including the effect of
IT on financial outcomes such as gross margins, return on assets and revenue per employee
(Bardhan, Mithas, & Lin, 2007). Research in the field of health IT (HIT) has shown that IT
can improve not only the quality (Appari, Johnson, & Anthony, 2013) and safety of care
(Kwon and Johnson, 2014), but can also decrease healthcare costs (Amarasingham,
Plantinga, Diener-West, Gaskin, & Powe, 2009).
While these are valuable insights, recent work on the business value of IT has called
for broader definitions of value and an expansion of the value thesis. In order to address the
evolving nature of IT, Kohli and Grover (2008) emphasise the need to examine intangible
value and call for a discontinuity in our thinking of how IT value should be studied, going
beyond the sole focus on business value as represented by economic and operational value. It
is against this backdrop that we seek to extend both our understanding and the scope of IT
value across multiple dimensions (Angst, Agarwal, Sambamurthy, & Kelley, 2010; Salge,
Kohli, & Barrett, 2015) in the specific context of health care. In particular, we attempt to
explicate how and in what ways HIT can enhance the value offered by healthcare providers.
We conduct an inductive case study to gain an in-depth understanding of IT value over time
at two different UK hospital sites. This approach is particularly well-suited for uncovering
different value facets which are not easily captured through traditional quantitative measures.
10.5465/AMBPP.2016.218

Our research makes three contributions. First, we contribute to IT business value

research by alerting scholars to the usefulness of extending their focus towards
multidimensional IT value contributions. Second, we uncover broader and dynamic forms of
IT value, such as enacting reputation judgments and enhancing regulative legitimacy. Third,
we suggest that this is a more fragile and tenuous form of IT value that is enacted in
healthcare practices.

LITERATURE REVIEW

Research on the business value of HIT has gained momentum in recent years, as
academics, practitioners and policy makers seek evidence for the HIT value proposition
(Romanow, Sunyoung, & Straub, 2012). Summarised in several reviews (Devaraj and Kohli,
2003; Kohli and Grover, 2008; Melville, Kraemer, & Gurbaxani, 2004), the overwhelming
majority of the literature examines the business value of HIT in terms of impact
(Amarasingham et al., 2009; Borzekowski, 2009; Lee, McCullough, & Town, 2013) and
improvements in healthcare delivery (Agarwal, Rao, DesRoches, & Jha, 2010). For example,
several studies report HIT can improve not only the quality (Appari et al., 2013; Devaraj and
Kohli, 2000) and security of care (Kwon and Johnson, 2014), but can also lead to lower
mortality rates (Amarasingham et al., 2009; Devaraj and Kohli, 2003) and improved patient
safety (Aron, Janakiraman, & Pathak, 2011; Parente and McCullough, 2009).
Consistent with Kohli and Grover (2008), our review reveals an existing bias towards
quantified profitability and operational measures of IT value. This predisposition, however,
might become a limitation for understanding the changing phenomenon of IT value creation.
It is important to emphasise that researchers are increasingly viewing value to be multifaceted
in nature, as “value is likely to be reflected along multiple dimensions and different
constituent elements” (Sarkar, Aulakh, & Madhok, 2009, p.585). For example, Kohli and
Grover (2008, p. 33) emphasise the need to examine intangible value, observing that in
today’s complex organisational contexts, both “businesses and customers are the final
arbitrators of value creation, and by over-emphasising pure financial post hoc metrics or even
ex ante market value, we underreport the true benefits of IT to these stakeholders”. Consistent
with these observations of recent work and calls to expand the scope of IT value across
multiple dimensions, we explore in the context of healthcare how and in what ways HIT can
enhance the value offered by healthcare providers.

METHODOLOGY
Research Context and Site Selection

We selected an inductive case study research design to gain an in-depth understanding

of HIT value over time at two different hospital members of a health group we call Alpha
Health Partners (AHP). This method enabled the emergence of original and rich findings that
are closely tied to the data, through a process of constant iteration and comparison (Charmaz,
2014; Corbin and Strauss, 2008). To facilitate iteration and comparison, we selected two
“polar type” hospital organisations in line with our research objective (Eisenhardt and
Graebner, 2007; Walsham, 1993, 1995). The first hospital, AHP1, which provides specialist
mental health services, was facing significant challenges of legitimacy with healthcare
regulators and had a poor reputation at the time of our study. The second hospital, AHP2,
enjoys a leading reputation internationally for its services and has had a favourable
endorsement from regulators, providing an opportunity to compare and contrast with AHP1.
10.5465/AMBPP.2016.218

Overall, the two “polar type” cases enabled us to better address our research question
in two ways. First, the two cases exhibited hospital similarities and differences that enabled
us to “observe contrasting patterns in the data” (Eisenhardt and Graebner, 2007, p.27). For
example, both hospitals share similarities in terms of the specialist nature of their services, IT
dependency for delivering care, a strong research focus and a similar IT strategy. At the same
time, the differences in organisational conditions allowed for useful contrasts to be made
during data analysis, which challenged and further elaborated our emerging concepts
(Charmaz, 2014). Second, given the differences between the two polar type cases, our within-
case analysis revealed findings that were idiosyncratic to the unique context of each hospital.
However, the importance of regulative legitimacy and reputation emerged as key themes in
understanding the multiple dimensions of IT value at both “polar type” hospitals, and this
reinforces the significance of our research design in studying both cases.

Data Collection

We collected data through site visits, formal interviews, informal discussions and
publicly available documents. Across both sites, the core of our data was derived from 26
semi-structured interviews with participants from a diverse range of backgrounds, different
hierarchical levels and service provisions. The interviews varied in length, ranging from 35 to
120 minutes. Our interview questions focused on understanding, through the participants’
eyes, the way in which HIT can have value in the context of their work. All interviews were
digitally recorded and subsequently transcribed. In addition we collected and analysed other
primary sources. These included informal chats and 10 gigabytes of internal documents (e.g.
operational, strategy and annual reports, presentations, newsletters) as well as archival and
documentary data (e.g. healthcare commissioning guidelines and regulator reports).

Data Analysis

Our analysis followed the principles of open ended, inductive theory building (Corbin
and Strauss, 2008), iterating between data and theoretical constructs. We engaged in within-
case analysis and became “intimately familiar with each case as a stand-alone entity”
(Eisenhardt, 1989, p.540). This enabled the unique patterns of each case to emerge before we
attempted to transfer insights across the cases, facilitating familiarity and accelerating the
cross-case comparison. This enabled us to conclude, for example, that the idiosyncrasies of
each of the hospitals alone did not account for our emerging themes.
The analysis of the data can be analytically divided into the three main cycles of open,
axial and selective coding (Corbin and Strauss, 2008; Strauss, 1987), which were not
temporally separated phases, but rather overlapping. Throughout all the different stages of
analysis, we used Atlas.Ti, a qualitative data analysis software package, to create an
integrated database. The first cycle involved the open coding of each case set of interview
transcripts, hospital annual reports and internal documents using descriptive and open codes
(Charmaz, 2014; Glaser and Strauss, 1968; Miles, Huberman, & Saldaña, 2013). It is
important to emphasise that data interpretation and category development were driven by
conceptual concerns in the data rather than a predetermined framework (Glaser and Strauss,
1968). This helped with addressing the participants’ concerns and the resulting theory around
multifaceted HIT value contributions can be seen as emergent and not forced onto the data.
The second cycle of analysis included axial coding. For example, we searched for
relationships between the open codes for each of the cases, which allowed for collapsing
them into second-order themes (Corbin and Strauss, 2008). Once we had developed second
order themes through a process of constant comparison for each case (Charmaz, 2014), we
reduced the data by gathering similar themes into aggregate dimensions across the two cases.
10.5465/AMBPP.2016.218

Finally, we reduced the data by gathering similar themes into aggregate dimensions through a
process of constant evaluation and revision of our second order themes with previous
literature in the third analysis cycle.

FINDINGS

Enacting Reputation and Regulative Legitimacy of HIT Value

We discovered emerging HIT value dimensions that go beyond traditional business

value. First, our case study hospitals utilised anonymised patient information from their
electronic medical records (EMRs) - “the digital repository of patient data that is shareable
across stakeholders” (Angst, Agarwal, Sambamurthy, & Kelley, 2010, p.1220), to engage
with their evaluating audiences and improve their reputation judgments. For example, our
informants stressed how EMR information can help them build better relationships with
different evaluating audiences such as general practitioners (GP), potential hires and doctors
carrying out research from different organisations. HIT was therefore seen as providing value
by helping our case hospitals engage better with them and improving reputation judgments
from their perspective.
Second, we also find that HIT can help hospitals improve their compliance levels with
regulator audiences, a matter of life and death for hospital organisations (Scott, 2013). In
England, the Care Quality Commission (CQC) closely audits, monitors and regulates all
public hospital organisations and thus constitutes a key legitimating agent (Mueller, Harvey,
& Howorth, 2003). Given CQC’s regulatory power of direct intervention, hospitals require
their endorsement which manifests in the form of publicly available hospital scores, rankings
and reports published online. Therefore, if hospitals are to continue to operate autonomously,
access financial and human resources and secure future patient referrals (Scott, Ruef, Mendel,
& Caronna, 2000), they have to convince CQC about the quality of their care delivery. Our
findings point to the value HIT can have in helping quantify the metrics regulators are
seeking when inspecting hospital and thus improving their regulative legitimacy, that is, the
“generalized perception or assumption [of a regulatory authority] that the actions of an entity
are desirable, proper, or appropriate within some socially constructed system of norms,
values, beliefs and definitions” (Suchman, 1995, p.574). Although this theme originally
emerged from within case analysis at AHP1, we found supporting evidence of the HIT value
in enhancing judgments of regulatory compliance at AHP2 as well.
Third, our findings suggest that healthcare practices enact both HIT regulative
legitimacy and reputation value examined above. We found this emerging theme at both
hospitals, even though they represent “polar type” cases. In this way, healthcare practices –
activities enabled by HIT that staff undertake in the care and treatment of patients in practice
– can be seen as enacting reputation and regulative legitimacy judgments. At the same time,
however, HIT might unfavourably influence judgments of reputation or legitimacy from the
perspective of different clinical staff. For instance, our interviewees mentioned that HIT can
introduce further work that might not necessarily make healthcare practices faster. Therefore,
HIT may be seen as enacting judgments of reputation favourably or unfavourably by acting
as enabler/inhibitor of healthcare practices that in turn can unfavourably influence the
perspective of different evaluating audiences.

Enacting Reputation as an Ongoing Process

Finally, our findings suggest that enacting HIT reputation value is an ongoing process.
This theorisation can help better conceptualise what we interpreted as the contingent status of
10.5465/AMBPP.2016.218

reputation HIT value as both generative (forming as a prerequisite for further benefits to
come) and vulnerable (forming as a hindering factor bearing negative consequences for
hospitals). Our findings thus build on previous literature suggesting that reputations must be
constantly reinforced (Lange, Lee, & Dai, 2011) and are easily amenable to change. This
suggests that the way in which judgments of reputation are enacted is a dynamic process,
with the possibility of a favourable or unfavourable reputation judgment continually
unfolding over time, despite the temporal accumulation of reputation assessments to the
status of an intangible resource. Viewing the process of judgment forming in this way invites
us to consider reputation HIT value not only as an enduring key strategic resource, generative
of future benefits for hospitals, but also as vulnerable in its enactment, potentially becoming a
hindering factor for hospitals’ ability to attract staff and funding.

DISCUSSION AND CONCLUSIONS

Despite the increasing recognition of the need for a wider HIT business value scope
(Kohli and Grover, 2008; Salge et al., 2015), we know little about other dimensions of value
which might capture overall IT value. In this article, we expand the scholarly understanding
of multidimensional HIT value creation potential. Through an exploratory, theory-building
study using two “polar type” hospital case studies, we uncover different dimensions of IT
“intangible value” that reflect a broader and multidimensional representation of value.

Implications for IT Payoff Research

First, we contribute to IT business value research by alerting scholars to the usefulness of

extending their focus towards multidimensional IT value contributions which can be
manifested beyond financial and operational outcomes. In this way, we directly respond to
calls in the literature (Kohli and Grover, 2008; Salge et al., 2015) for broadening the IT value
agenda. We address the evolving nature of IT value and introduce a discontinuity in thinking
of how IT value should be studied.
Second, our findings suggest that HIT can provide broader and dynamic forms of value,
such as enacting reputation judgments and enhancing regulative legitimacy (Antons, Salge,
Barrett, Kohli, & Oborn, 2014; Bitektine, 2011; Kohli and Grover, 2008; Salge et al., 2015).
Whilst previous work has emphasised IT value (such as economic or operational) in terms of
new organisational processes that produce specific, relatively stable value outcomes (Kohli
and Grover, 2008), our analysis shows a more fragile and tenuous form of IT value that is
enacted in practice. For example, new IT enabled nursing practices can lead to new,
favourable reputational judgments being enacted; yet negative assessment of new clinical
practices, such as from unplanned disruptions during IT implementation, can enact a negative
reputation from the perspective of different evaluating audiences. Our findings suggest that
HIT value is not unitary but inherently multidimensional, where reputation judgment
enactments vary in terms of how different stakeholder groups value HIT and what criteria
they consider in doing so (Deephouse and Carter, 2005; Mishina, Block, & Mannor, 2012).
With respect to enhancing regulative legitimacy, our findings suggest that hospitals can
use HIT to gain compliance with regulators and achieve the most basic of objectives, that is,
organisational survival. Beyond England, regulative legitimacy was found to be a critical
factor in the market-oriented U.S. healthcare system, given the powerful role of accreditation
agencies (Ruef and Scott, 1998). In this way, HIT can provide value by enabling hospitals to
provide regulators with the appropriate information needed to secure favourable judgments of
regulative legitimacy; sole focus on IT value as captured by strong financial and operational
10.5465/AMBPP.2016.218

performance may not necessarily guarantee organisational survival in the absence of

sufficient regulatory legitimacy.

Implications for Practice

Finally, our study also has implications for practitioners. IT managers can use our
findings to further strengthen their business case for IS investments, by crafting rhetorical
strategies for seeking additional IS investments (Suddaby and Greenwood, 2005). We also
suggest that IT managers can strategically tailor their HIT use to match different audience-
specific judgment criteria of reputation and regulative legitimacy, thereby improving the
social fitness of their organisation in conjunction to economic fitness for organisational
survival (DiMaggio and Powell, 1983; Rao, 1994). Moreover, our conceptualisation of
hospital reputation as an ongoing process can help hospital managers better understand the
dynamics involved in securing favourable judgments from evaluating audiences through HIT.
Even though it is widely recognised that reputation takes significant time and effort to
develop (Fombrun, 1996), forming based on past actions (Balmer, 2003; Barney, 1991) and
becoming an enduring and “sticky” resource (Ang and Wight, 2009; Fombrun and Van Riel,
2004; Schultz, Mouritsen, & Gabrielsen, 2001), our findings suggest that managers should
pay particular attention to a constant reinforcement of favourable judgments and sensitivity to
the ease with which such judgments can become unfavourable for their hospitals.

REFERENCES AVAILABLE FROM THE AUTHORS

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