Health Information Technology Redeployment from Targets to Acquirers in the Healthcare Industry: The Role of Co-Specialized Human Capital in Value Creation

In view of the increasing number of hospital mergers and acquisitions (M&A) and the significant role of healthcare services in the economy, a variety of recent studies have shed light on how health information technology (HIT) contributes to value creation from hospital M&A. However, there has been little attention paid to value creation by the redeployment of target digital resources to acquiring hospitals and the conditions needed to create value from such resource redeployment. This paper highlights how post-M&A HIT redeployment from targets to acquirers influences the quality of care of the acquirer. First, the results demonstrate the importance of retaining elements of the co-specialized human capital of the target hospital post M&A as central to creating value from HIT redeployment. Second, HIT redeployment from the target to the acquirer is more valuable when the diagnostic context of the acquirer is complementary to but also distinct from the diagnostic context of the target hospitals. Third, the Electronic Medical Record system (EMR) compatibility between the target and the acquirer also plays an essential role in facilitating value creation for the acquiring hospital from the transfer of knowledge-based capabilities from the targets.