Electronic Health Record Implementation Enhances Financial Performance in High Medicaid Nursing Homes

Introduction: The nursing home (NH) industry operates within a two-tiered system, wherein high Medicaid NHs which disproportionately serve marginalized populations, exhibit poorer quality of care and financial performance. Utilizing the resource-based view of the firm, this study aimed to investigate the association between electronic health record (EHR) implementation and financial performance in high Medicaid NHs. A positive correlation could allow high Medicaid NHs to leverage technology to enhance efficiency and financial health, thereby establishing a business case for EHR investments. Methods: Data from 2017 to 2018 were sourced from mail surveys sent to the Director of Nursing in high Medicaid NHs (defined as having 85% or more Medicaid census, excluding facilities with over 10% private pay or 8% Medicare), and secondary sources like LTCFocus.org and Centers for Medicare & Medicaid Services cost reports. From the initial sample of 1,050 NHs, a 37% response rate was achieved (391 surveys). Propensity score inverse probability weighting was used to account for potential non-response bias. The independent variable, EHR Implementation Score (EIS), was calculated as the sum of scores across five EHR functionalities—administrative, documentation, order entry, results viewing, and clinical tools—and reflected the extent of electronic implementation. The dependent variable, total margin, represented NH financial performance. A multivariable linear regression model was used, adjusting for organizational and market-level control variables that may independently affect NH financial performance. Results: Approximately 76% of high Medicaid NHs had implemented EHR either fully or partially (n = 391). The multivariable regression model revealed that a one-unit increase in EIS was associated with a 0.12% increase in the total margin (p = 0.05, CI: − 0.00– 0.25). Conclusion: The findings highlight a potential business case —long-term financial returns for the initial investments required for EHR implementation. Nonetheless, policy interventions including subsidies may still be necessary to stimulate EHR implementation, particularly in high Medicaid NHs. Keywords: electronic health records, health information technology, financial performance, high-Medicaid nursing homes