The role of technology and quality on hospital financial performance

The stimulus for this research is that as US hospitals and health care organizations become more competitive, wise investments in technology and quality improvement are keys to financial success and survival. A structural equation model is hypothesized using the following five constructs: clinical technology; information technology; clinical quality; process quality; and hospital financial performance. No research to date has examined the relationships between the type of technology, the type of quality, and hospital financial performance. The general research hypothesis tested is that hospital technology directly drives (affects) quality and hospital financial performance. The results indicate that the type of hospital technology (clinical or information) drives different types of quality‐related performance (clinical or process), and directly and indirectly affects hospital financial performance. The simple recursive model documented here is an important first step to defining more complete models that accurately predict hospital financial performance as a function of technology and quality investments and initiatives. The article concludes by summarizing results, discussing their implications, and proposing future research ideas.