Information processing, mutual understanding, and organization design in healthcare

Abstract Research Summary Prior research predicts that information technology (IT) decentralizes decisions by increasing access to information relevant for decision‐making. Yet this view underestimates the coordination challenges and communication costs created by interdependent work. We argue that while an IT system with its accessibility and standardization of information may facilitate the decentralization of decisions, decentralization also requires uniform interpretation and utilization of the information. Using a quasi‐natural experiment based on the staggered introduction of electronic health records (EHR) in a large US hospital system, we find EHR implementation increases decentralization, but this effect is amplified when care team members exhibit mutual understanding of other team members, task‐related processes, and the clinical problem‐solving context. We contribute to theories of information processing, organization design, and coordination in healthcare. Managerial Summary Organizations often adopt information technology (IT), expecting that better access to standardized information will allow frontline employees to make more decisions independently. Our study shows that IT alone does not increase decentralization. In highly interdependent environments, such as hospitals, decentralized decision‐making also requires that team members interpret and use information more uniformly. Using the staggered rollout of electronic health records (EHR) in a large US hospital system, we find that EHRs increase decentralization, with substantially stronger effects when care team members share a mutual understanding of each other, of core work processes, and of the clinical context. In practice, this means routine decisions move down to nurses and other care team members, freeing physicians' time for work that requires specialized clinical expertise. Our study demonstrates that organizations should pair technology investments with efforts to build shared knowledge and common practices across teams to better ensure changes to the design of hospital care teams.