IMPACT OF INSTITUIONAL AND TASK ENVIRONMENT: INFORMATION TECHNOLOGY IN HEALTHCARE

IMPACT OF INSTITUIONAL AND TASK ENVIRONMENT: INFORMATION TECHNOLOGY IN HEALTHCARE Sushma Mishra Virginia Commonwealth University 301 W Main Street Richmond 23284 mishras@vcu.edu ABSTRACT Organizations adopt the changes introduced by institutional forces acting across the industry, to gain legitimacy and social acceptance. A conceptual model is presented predicting some responses in such situation and the model is illustrated by example of EHR and other related technology implementation in Healthcare industry. Some implications are drawn. Keywords: electronic medical record, institutional forces, healthcare Introduction Use of Electronic Medical Record (EMR) across Healthcare Industry is being greatly emphasized by Federal government in US. There is a drive for using information systems for administrative purposes, patient records and sharing of soft data across agencies in health care delivery chain or all points of patient care. President Bush s vision of nationwide EHR implementation by 2014 (NHPF, 2004) i.e. in next ten years is supported by Health Insurance Portability and Accountability Act (HIPPA) pressurizing health care providers to move towards automation. The use of electronically enabled services would provide easy and efficient access to patient data. Electronic Health Records (EHR) can serve many purposes, in combination with some tools such as a decision support system, and improve the quality of health services for consumers. Even though this exercise of converting patient data in electronic form seems beneficial for all, little has been achieved so far in this direction. After almost a decade of HIPPA and with moving compliance dates, not much progress has been made in achieving the dream of EHR everywhere. It is a challenge to integrate the data lying in offices of many healthcare organizations as the way data has been traditionally stored in various points of patient care (such as clinics, hospitals or insurance companies) offices are different from each other. Even if electronic recording system is being used by some existing companies, the underlying data structures and levels of granularity of data are different (McDonald, 1997). Some of the commonly cited reasons for the lag are: cost, organizational culture, technology trepidation and practice disruption (NHPF, 2004). IT implementation can be a challenge in an environment which is technology intensive and dealing with new changes requires organizational preparedness. This lag in form of not coping up with the change is 1521

there, even though there is tremendous institutional pressure on this industry to adopt these changes. There is regulation, federal support and encouragement to adopt IT into health care management. Healthcare industry is characterized by strong, heterogeneous institutional forces and relatively strong market forces (D Aunno et. al., 2000). There are many changes on the horizon indicating a phase of transition for this industry. The health care system in this country is unique industry in the sense in depends on a mix of market forces, governmental regulation professional norms and organizational missions to shape access, cost and quality of health care (Lesser, Ginsburg and Devers, 2003, p. 339). EHR and related IT technologies are acting as change agents. Arguably, organizations in same business or industry are exposed to similar kind of institutional forces in form of regulatory, legal, market fluctuations, skill set requirement, resources (human, financial or physical) etc. Even though stimuli for change across the industry are the same, the individual responses of organizations to these signals would be different, depending on its internal dynamics. In our example, implementation of EHR and other IT technologies, present such a situation where institutional forces are acting but adoption of change is slow or minimal. The research question that this study investigates is: In a situation like above, where task complexity and uncertainty prevents organizations to adopt a change (EHR implementation in Healthcare) and institutional forces stimulate to adopt these changes, what course of action does an organization take i.e. how does it respond? A brief review of theoretical underpinnings of this work is presented, followed by the argument and a research model with proposed hypotheses in the next section. The model presented is conceptual in nature and based on logic and research literature. The concluding section presents possible limitations, contributions and future research direction for this work. Theoretical Background Institutional environment refers to the external forces such as legal and political environment, the market behavior and general belief systems, which impacts an organization. Scott (2005) argues, Institutions are composed of cultural-cognitive, normative, and regulative elements that together with associated activities and resources, provide stability and meaning to social life (p. 134). New institutionalism in organization theory literature refers to the views propagated by DiMaggio and Powell (1991). They argue that organizations that are into same line of business are exposed to similar institutional forces and thus formal structure of these organizations are more in response to these forces than to the actual need of the organization. This explains isomorphic forms of organizations i.e. the push towards homogenization in forms and structure. They have identified three mechanism through which institutional isomorphic changes occurs (DiMaggio and Powell, 1991). These are: Coercive isomorphism: These are the forces arising from political and influence and problem of legitimacy. These could be legal and technical requirements imposed by government. Hospitals as an industry are susceptible to regulatory pressure. It has high degree of technical and institutional development, depends on centralized funding and has predominantly a fragmented decision-making structure (Alexander and Amburgey, 1987). Thus with increasing regulatory pressure, these organizations face increased administrative complexity. 1522

In our example of IT implementation in health care, there is tremendous political pressure on this industry to adopt IT for its functioning. This is further enhanced by Health Insurance Portability and Accountability Act (HIPAA) of 1996 that calls personal patient data privileged and emphasizes privacy and security of this data, within an agency collecting the data as well during data transfer to other related agencies. Mimetic isomorphism: These are forces resulting from standard responses to uncertainty across industry. Uncertainty regarding environmental challenges and incapability of responding uniquely in a matter consistent with its internal goals and capabilities, organizations tend to model its responses after other players who are successful to overcome similar challenges. In case of IT in healthcare, organizations can jump and join the bandwagon of companies implementing IT. But without internal preparation of introducing such a change in its environment, such efforts might not lead to desirable result of better productivity and increased data security. Normative isomorphism: These forces are associated with professionalization. It indicates the institutionalized norms of code of conducts that are accepted in an organizations and society regarding different roles. Two sources of professional power as suggested by DiMaggio and Powell (1991) are university as it socializes students to behave appropriately in a given context and professional network, as it provides a platform for employees of different organizations to interact, learn and adopt from each other. Introduction of IT in healthcare providers would initiate a culture where use of IT in hospitals and other related organizations would be become standard norm. Any organization not using this would tend to be viewed unfavorably in society, not only by industry but also by society. This creates enormous pressure in form of expectations from other stakeholders (society, government, industry) to comply with popular norms. Contingency theory suggests that organizations whose internal features best fit the demands of their environments will achieve the best adaptation (Scott, 2005, p. 96). Task environment could be defined as the features specific to an organization such as its supply of input and its disposition of output. It also includes the power-dependence relationship that an organization has with its suppliers, vendors, regulators and competitors. It refers an environment unique to a particular organization due to its own individual composition. Implementing technology in an organization brings in structural and functional changes. Organizational attributes such as effective communication of goals, participative decision making involving employees from all levels, top-management support, planning, the existence of champions, and reward systems affect internal diffusion (Ash, 1997) and are important to be considered while implementing any IT solution in an organization. Organizations in this industry could have governance problems due to specialty of industry. Hospitals as an organization have this unique feature that physicians that are their prime resource are typically not their employees and could work with multiple healthcare organizations (hospitals, outpatient, clinics, diagnostic centers or their own medical groups). Thus motivating doctors to participate and use IT systems needs 1523

unusual means. These professionals are used to autonomy and actions such as these which could measure their performance would be resisted. Another important criterion of this decision could be the cost of implementing such a change. Health care providers find that improving information technology capability is an important effort towards quality improvement (Devers, 2002). The findings also suggest that one of the barriers to implementing these improvement programs is financial pressure due decrease in profitability of hospitals and medical groups. Conceptual Framework Institutional tasks help in establishing the organization in its social context, provides legitimacy to its operations and intents and in a way define the broad guidelines for organization performing similar tasks or organizational sets, a meaning social, cultural and political meaning to its existence. There has to be a balance between the institutional forces and organizational capabilities to cope with such pressures. When the internal forces do permit or the external forces become too compelling, organization do follow the general trend. As Shortell (1997) observes, hospitals that do adopt the total quality management practices early do it for technical efficiency, but the late adopters do follow these organization in adopting it, more for legitimacy reasons. Thus formalization of structures in organizations is referred as rationalized myth (Meyer and Rowan, 1991), as these are more due to institutional pressures than due to actual technical requirements. The proposed framework (Fig. 1) has task environment on a continuum from favorable to unfavorable, on horizontal axis and strength of institutional forces on a continuum from strong to weak on vertical axis. Depending on the quadrant to which an organization belongs on intersection of these two axes, the response of an organization can be predicted. The four anchor points of this framework are described below: Task environment favorable means that uncertainty and complexity of doing a job is less, i.e. an organization is more prepared to bring in a change or meet the demands of the change being brought upon. Task environment unfavorable means that uncertainty and complexity of doing a job is huge, i.e. an organization is not prepared to bring in a change or meet the demands of the change being brought upon. Institutional forces weak means that cumulative effect of various kinds of institutional forces (regulative, normative and mimetic) is not strong enough to change organizational practices in a context. Institutional forces strong means that cumulative effect of various kinds of institutional forces (regulative, normative and mimetic) is strong enough to change organizational practices in a context. Based on the above description, following hypotheses are proposed: Hypothesis 1. If the task environment is more favorable and institutional forces are strong, an organization would readily adopt the change. Hypothesis 2. If task environment is unfavorable and institutional forces are strong, an organization will have to change else perish. Hypothesis 3. If the task environment is unfavorable and institutional forces are weak too, an organization will just wait and take no action about the change. 1524

Hypothesis 4. If the task environment is more favorable and institutional forces are weak, an organization can be the harbinger of change and thus shape new practices for others. Based on the quadrant that a particular organization belongs in the framework below, the response to the change will be decided. In quadrant I, entrepreneurial organization that has innovative culture lies, which has a strong pressure to gain legitimacy and is internally capable of change. Such organizations would readily change under pressure. In quadrant II, organizations unable to change due to any internal reason, with strong institutional forces urging them to change, will either change themselves internally and become capable of changing (move out of this quadrant) or will perish. If there is a misfit between their internal capabilities and environmental pressure, they have to change else they cannot survive. In quadrant III lies, organizations which are not well prepared to change and there is less pressure to change, will maintain the status quo and adopt a plan of wait and watch. There is no incentive for them to change. In quadrant IV, organizations which have the resources to change and feel the institutional pressure less are usually the ones which define the trend. These are the giants in an industry, which will either adopt to new changes and thus institunalize them or have the power to affect and shape the institutional forces as per their needs. These are giants of the industry. Institutional Forces-Strong II. Move or Perish I. Ready to change: Innovative Task Environ Unfavorable Task Environ Favorable III. No action: status quo IV. Define the trend. Giants Institutional Forces-Weak Fig. 1 Conceptual mapping of impact of external and internal forces on organizations 1525

Conclusion The framework has theoretical and practical contributions. It is grounded in theory and suggests a theoretical way of assessing the impact of change on an organization or industry. To realize the actual benefit of IS/IT implementation in an organization, it is important to have a strong change management program in organization and to instill the context of implementation into the minds of employees about to use the system. Future research entails empirical validation of the hypothesis proposed. Reference: Alexander, J.A and Amburgey, T.L. (1987). The Dynamics of Change in the American Hospital Industry: Transformation or Selection. Medical Care Review. Vol. 42, No. 2, pp. 279-317 Ash, J. (Mar-Apr; 1997). Organizational Factors that Influence Information Technology Diffusion in Academic Health Sciences Centers. Journal of American Medical Informatics Association. 4(2): 102 109. Barrows, R.C. and Clayton, P.D. (1996). Privacy, Confidentiality and electronic Medical Records. The Practice of Informatics, Journal of the American Medical Informatics Association. Vol. 3, No. 2 D Aunno, T., Succi, M. and Alexander, J.A. (2000). The Role of Institutional and Market Forces in Divergent Organizational Change. Administrative Science Quarterly. Vol. 45, pp. 679-703 Devers, K. J. (2002). Quality Improvement by Providers: Market Developments Hinder Progress. Health Affairs. Vol. 21, No. 5 DiMaggio, P.J. and Powell, W.W. (1991). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. In W. Powell and DiMaggio (Eds.). The New Institutionalism in Organizational Analysis, The University of Chicago Press, pp. 63-82 Lesser, C.S., Ginsburg, P. B and Devers, K. J. (February 2003). The End of an Era: What became of the Managed Care Revolution in 2001? HSR: Heath Services Research. Vol. 38. No. 1, Part II. pp. 337-355 McDonald, C.J. (1997). The Barriers to Electronic Medical Record Systems and How to Overcome Them. Journal of American Medical Informatics Association. Vol. 4, pp. 213-221 Meyer, J. W. and Rowan, B. (1991). Institutionalized Organizations: Formal Structure as Myth and Ceremony. Institutionalized Organizations: Formal Structure as Myth and Ceremony, In W. Powell and DiMaggio (Eds.). The New Institutionalism in Organizational Analysis, The University of Chicago Press, pp. 411-62 Miller, R.H. and Sim, I. (2004). Physicians Use of Electronic Medical Records: Barriers And Solutions. Pursuit of Quality. pp. 116-126 Scott, W.R. (2005). Organizations: Rational, Natural and Open Systems (5 th Edition). Englewood Cliffs, N.J.: Prentice-Hall. Shortell, S.M. (March-1997). Commentary. Medical Care Research and Review. Vol. 54, No. 1, pp. 25-31 1526