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Judging performance impact of IT: Don't overlook actual usage, says O.R. study

LINTHICUM, MD - A study of Information Technology at a hospital chain suggests that IT's impact on organizational performance is more clearly illustrated by actual IT usage than by traditional measures alone like the amount invested in technology, according to a study that appears in a journal of the Institute for Operations Research and the Management Sciences (INFORMS).

The study shows a link between higher usage levels of a Decision Support System (DSS) - a standard tool made available by operations researchers - and quality and profitability benefits such as lower patient death rates and increased hospital profitability.

"For example, our findings indicate that if managers execute and use the analysis from 10 additional DSS reports per month, the hospital can increase revenues by over $140 per patient," says Rajiv Kohli of the University of Notre Dame. "In today's healthcare environment, where profits are razor-thin, all of this could be additional profit. This is one more way for managers to get value from information technology in which they have already invested."

Furthermore, co-author Sarv Devaraj adds, "we observe a definite reduction in mortality rate. Our research shows that lives are being saved."

Kohli cautions that "usage of the DSS analysis must be translated into action on the hospital floor to ensure financial and quality-based value."

"Performance Impacts of Information Technology: Is Actual Usage the Missing Link?" is by Prof. Kohli and Sarv Devaraj of the University of Notre Dame. It appears in the current issue of the INFORMS journal Management Science. A summary of the study can be found online at http://www.informs.org/Press/ITUsageabstract.pdf.

Breaking with Old Ways of Measuring Payoff

With increased investment in technology, managers are pressured to provide economic justification for their spending. A surge in the number of st
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Contact: Barry List
barry.list@informs.org
410-691-7862
Institute for Operations Research and the Management Sciences
21-Apr-2003


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