CC BY-NC-ND 4.0 · Appl Clin Inform 2022; 13(03): 665-676
DOI: 10.1055/s-0042-1750415
Research Article

Higher Electronic Health Record Functionality Is Associated with Lower Operating Costs in Urban—but Not Rural—Hospitals

Claudia A. Rhoades
1   Department of Agricultural Economics, Oklahoma State University, Stillwater, Oklahoma, United States
Brian E. Whitacre
1   Department of Agricultural Economics, Oklahoma State University, Stillwater, Oklahoma, United States
Alison F. Davis
2   Department of Agricultural Economics, University of Kentucky, Lexington, Kentucky, United States
› Author Affiliations
Funding This study was supported by the Federal Office of Rural Health Policy (FORHP), Health Resources and Services Administration (HRSA), U.S. Department of Health and Human Services (HHS) under cooperative agreement # U1ZRH33331–02–01. The information, conclusions, and opinions expressed in this article are those of the authors and no endorsement by FORHP, HRSA, HHS, Oklahoma State University or University of Kentucky is intended or should be inferred.


Objectives The aim of the study is to examine the relationship between electronic health record (EHR) use/functionality and hospital operating costs (divided into five subcategories), and to compare the results across rural and urban facilities.

Methods We match hospital-level data on EHR use/functionality with operating costs and facility characteristics to perform linear regressions with hospital- and time-fixed effects on a panel of 1,596 U.S. hospitals observed annually from 2016 to 2019. Our dependent variables are the logs of the various hospital operating cost categories, and alternative metrics for EHR use/functionality serve as the primary independent variables of interest. Data on EHR use/functionality are retrieved from the American Hospital Association's (AHA) Annual Survey of Hospitals Information Technology (IT) Supplement, and hospital operating cost and characteristic data are retrieved from the American Hospital Directory. We include only hospitals classified as “general medical and surgical,” removing specialty hospitals.

Results Our results suggest, first, that increasing levels of EHR functionality are associated with hospital operating cost reductions. Second, that these significant cost reductions are exclusively seen in urban hospitals, with the associated coefficient suggesting cost savings of 0.14% for each additional EHR function. Third, that urban EHR-related cost reductions are driven by general/ancillary and outpatient costs. Finally, that a wide variety of EHR functions are associated with cost reductions for urban facilities, while no EHR function is associated with significant cost reductions in rural locations.

Conclusion Increasing EHR functionality is associated with significant hospital operating cost reductions in urban locations. These results do not hold across geographies, and policies to promote greater EHR functionality in rural hospitals will likely not lead to short-term cost reductions.

Protection of Human and Animal Subjects

This research included only secondary analysis of existing hospital-level data that did not include any living individuals or any identifiable private information. As such, no Institutional Review Board (IRB) oversight was required.

Data Accessibility

The data that support the findings of this study are available from the American Hospital Association's (AHA) Information Technology (IT) supplement and the American Hospital Directory (AHD), but restrictions apply to the availability of these data, which were used under license for the current study, and so are not publicly available.

Author Contributions

C.A.R. aggregated the relevant data, performed the regression analysis, and led the writing of the manuscript. B.E.W. helped with data gathering, led the development of the econometric approach, reviewed the regression results, and contributed to the manuscript writing. A.F.D. contributed to the manuscript writing and provided funding for C.A.R.'s assistantship and the relevant data purchases. All listed authors in this manuscript have approved this final version.

Supplementary Material

Publication History

Received: 27 January 2022

Accepted: 30 April 2022

Article published online:
27 July 2022

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