Information Technology in the Health Care Industry Essay

6278 Words Jan 18th, 2013 26 Pages
Proceedings of the 33rd Hawaii International Conference on System Sciences - 2000

Information Technology in the Health Care Industry: A Primer
Peter B. Southard, Soongoo Hong, Keng Siau Department of Management College of Business Administration University of Nebraska-Lincoln Lincoln, NE 68588-0491 USA
E-mail: psouthar@unlserve.unl.edu, shong@tamiu.edu, ksiau1@unl.edu

Abstract
The paper discusses current and future applications of information technology within the healthcare industry. It presents some broad strategies for approaching information technology investments and various tools available.

1. Introduction
Today, information technology is considered not just a supporting tool but a “strategic necessity” by world class
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Hospitals simply calculated service fees, “cost plus reasonable profits,” and billed this to patients. Medicare paid hospital costs related to patients’ treatment – the payer of hospital services covering 45% of such expense [3]. This continued until 1983. In 1984, Medicare altered its payment system from “a flat amount per discharge” to a “fixed rate” based on each patient’s diagnosis given by a Diagnosis Related Group [3]. In the1990s, the health care industry has been confronting more severe challenges resulting from severe market competition brought about in large part by changes in government regulations. As competition intensifies, health care providers have shifted their strategy from “a fee-forservice” to “a managed-care” and “a patient-focused hospital” whose implementation is almost impossible without the support of information technology. As the health care environment changes, so does the role of health care information systems. Most experts agreed that when rivalry was less intense, information systems in the organizations were used for automation and to support simple management operations such as billing and administrative tasks. The role of information systems remained at the automation stage, dealing with management tasks that occurred routinely at the lower and middle management level. In this stage, transaction processing systems and management information systems are heavily used for the daily operations

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