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

Chengxin Cao; Gautam Ray; Mani Subramani; Alok Gupta

doi:10.25300/misq/2025/18693

journal article Aug 18, 2025

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

Chengxin Cao Gautam Ray Mani Subramani Alok Gupta

MIS Quarterly pp. 1-34 · MIS Quarterly

View at Publisher Save 10.25300/misq/2025/18693

Abstract

In view of the increasing number of hospital mergers and acquisitions (M&As) 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&As. However, little attention has been paid to value creation through the redeployment of the target hospital’s digital resources to the acquiring hospital and the conditions needed to create value from such resource redeployment. This paper highlights how post-M&A HIT redeployment from the target to the acquirer 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 acquiring hospital is complementary to but also distinct from the diagnostic context of the target hospital. Third, the electronic health record system 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 target.

Topics

No keywords indexed for this article. Browse by subject →

References

92

[1]

Agha "The effects of health information technology on the costs and quality of medical care" Journal of health economics (2014) 10.1016/j.jhealeco.2013.12.005

[2]

Ahuja "Technological acquisitions and the innovation performance of acquiring firms: A longitudinal study" Strategic management journal (2001) 10.1002/smj.157

[3]

Angrist (2009) 10.1515/9781400829828

[4]

Angst "Social contagion and information technology diffusion: The adoption of electronic medical records in US hospitals" Management Science (2010) 10.1287/mnsc.1100.1183

[5]

Angst "Dual role of IT-assisted communication in patient care: a validated structure-process-outcome framework" Journal of Management Information Systems (2012) 10.2753/mis0742-1222290209

[6]

Angst "Performance effects related to the sequence of integration of healthcare technologies" Production and Operations Management (2011) 10.1111/j.1937-5956.2011.01218.x

[7]

Aron "The impact of automation of systems on medical errors: evidence from field research" Information systems research (2011) 10.1287/isre.1110.0350

[8]

Ayer "The impact of health information exchanges on emergency department length of stay" Production and operations management (2019) 10.1111/poms.12953

[9]

Bailey, V. (2022) How healthcare mergers, acquisitions impact practice management. RevCycleIntelligence, 06 May. Retrieved from https://revcycleintelligence.com/features/how-healthcare-mergers-acquisitions-impact-practice-management#:~:text=May%2006%2C%202022%20%2D%20Healthcare%20mergers,of%20care%20through%20these%20transactions

[10]

Bardhan "Predictive analytics for readmission of patients with congestive heart failure" Information Systems Research (2015) 10.1287/isre.2014.0553

[11]

Barney "Returns to bidding firms in mergers and acquisitions: Reconsidering the relatedness hypothesis" Strategic Management Journal (1988) 10.1002/smj.4250090708

[12]

Baron (2005)

[13]

Basch "Electronic health records and the national health information network: Affordable, adoptable, and ready for prime time?" Annals of internal medicine (2005) 10.7326/0003-4819-143-3-200508020-00009

[14]

Improving Safety with Information Technology

David W. Bates, Atul A. Gawande

New England Journal of Medicine 2003 10.1056/nejmsa020847

[15]

Beaulieu "Changes in quality of care after hospital mergers and acquisitions" New England Journal of Medicine (2020) 10.1056/nejmsa1901383

[16]

Benitez "Impact of information technology infrastructure flexibility on mergers and acquisitions" MIS quarterly (2018) 10.25300/misq/2018/13245

[17]

Borzekowski "Measuring the cost impact of hospital information systems: 1987-1994" Journal of Health Economics (2009) 10.1016/j.jhealeco.2009.06.004

[18]

Organizational Learning and Communities-of-Practice: Toward a Unified View of Working, Learning, and Innovation

John Seely Brown, Paul Duguid

Organization Science 1991 10.1287/orsc.2.1.40

[19]

Campbell "Defining quality of care" Social science & medicine (2000) 10.1016/s0277-9536(00)00057-5

[20]

Cao "Enterprise systems and the likelihood of horizontal, vertical and conglomerate mergers and acquisitions" MIS Quarterly (2022) 10.25300/misq/2022/15631

[21]

Cao "Enterprise systems and M&A outcomes for acquirers and targets" MIS Quarterly (2022) 10.25300/misq/2022/15594

[22]

Capron "Resource redeployment following horizontal acquisitions in Europe and North America, 1988–1992" Strategic management journal (1998) 10.1002/(sici)1097-0266(199807)19:7<631::aid-smj963>3.0.co;2-9

[23]

Cerullo "Association between hospital private equity acquisition and outcomes of acute medical conditions among Medicare beneficiaries" JAMA network open (2022) 10.1001/jamanetworkopen.2022.9581

[24]

CMS . (2019). Design and development of the Diagnosis Related Group (DRG). Centers for Medicare & Medicaid Services. https://www.cms.gov/icd10m/fy2023-version40-fullcode-cms/fullcode_cms/Design_and_development_of_the_Diagnosis_Related_Group_(DRGs).pdf

[25]

CMS (2023, December). NHE Fact Sheet. Centers for Medicare & Medicaid Services. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet#:~:text=NHE%20grew%204.1%25%20to%20%244.5,18%20percent%20of%20total%20NHE.

[26]

Curto "Price effects of vertical integration and joint contracting between physicians and hospitals in massachusetts: Study examines the price effects of vertical integration and joint contracting between physicians and hospitals" Health Affairs (2022) 10.1377/hlthaff.2021.00727

[27]

Dafny "Estimation and identification of merger effects: An application to hospital mergers" The Journal of Law and Economics (2009) 10.1086/600079

[28]

Díaz "Are M&A premiums too high? Analysis of a quadratic relationship between premiums and returns" Quarterly Journal of Finance and Accounting (2009)

[29]

Asset Stock Accumulation and Sustainability of Competitive Advantage

Ingemar Dierickx, Karel Cool

Management Science 1989 10.1287/mnsc.35.12.1504

[30]

Dixon "Interoperability and health information exchange for public health" (2020) 10.1007/978-3-030-41215-9_18

[31]

Dranove "Cost reductions or reputation enhancement as motives for mergers: The logic of multihospital systems" Strategic Management Journal (1995) 10.1002/smj.4250160107

[32]

Du "Research note—parenting new acquisitions: acquirers’ digital resource redeployment and targets’ performance improvement in the US hospital industry" Information Systems Research (2015) 10.1287/isre.2015.0604

[33]

Galunic "Resource recombinations in the firm: Knowledge structures and the potential for Schumpeterian innovation" Strategic management journal (1998) 10.1002/(sici)1097-0266(1998120)19:12<1193::aid-smj5>3.0.co;2-f

[34]

Gambardella "Strategic incentives to human capital" Strategic management journal (2015) 10.1002/smj.2200

[35]

Glick "Design and analysis of unit cost estimation studies: how many hospital diagnoses? How many countries?" Health Economics (2003) 10.1002/hec.750

[36]

Graebner "The process of postmerger integration: A review and agenda for future research" Academy of Management Annals (2017) 10.5465/annals.2014.0078

[37]

Prospering in Dynamically-Competitive Environments: Organizational Capability as Knowledge Integration

Robert M. Grant

Organization Science 1996 10.1287/orsc.7.4.375

[38]

The Architecture of Cooperation: Managing Coordination Costs and Appropriation Concerns in Strategic Alliances

Ranjay Gulati, Harbir Singh

Administrative Science Quarterly 1998 10.2307/2393616

[39]

Harrison "Synergies and post-acquisition performance: Differences versus similarities in resource allocations" Journal of management (1991) 10.1177/014920639101700111

[40]

Harrison "Resource complementarity in business combinations: Extending the logic to organizational alliances" Journal of management (2001) 10.1177/014920630102700605

[41]

Haspeslagh (1991)

[42]

Hedlund "A model of knowledge management and the N-form corporation" Strategic management journal (1994) 10.1002/smj.4250151006

[43]

Henderson (1993)

[44]

Henningsson "A Review of Information System Integration in Mergers and Acquisitions" Journal of Information Technology (2018) 10.1057/s41265-017-0051-9

[45]

HHS (2012)

[46]

Hitt "The market for corporate control and firm innovation" Academy of management journal (1996) 10.2307/256993

[47]

Kale "Choosing equity stakes in technology-sourcing relationships: An integrative framework" California Management Review (2004) 10.2307/41166222

[48]

Kennebeck "Impact of electronic health record implementation on patient flow metrics in a pediatric emergency department" Journal of the American Medical Informatics Association (2012) 10.1136/amiajnl-2011-000462

[49]

Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology

Bruce Kogut, Udo Zander

Organization Science 1992 10.1287/orsc.3.3.383

[50]

Lawrence "Differentiation and integration in complex organizations" Administrative science quarterly (1967) 10.2307/2391211

Showing 50 of 92 references

Metrics

0

Citations

92

References

Details

Published: Aug 18, 2025
Pages: 1-34

Authors

C

Chengxin Cao

Paul Chook Department of Information Systems and Statistics, Zicklin School of Business, Baruch College, New York, NY U.S.A.

G

Gautam Ray

Department of Information & Decision Sciences, Carlson School of Management, University of Minnesota, Minneapolis, MN U.S.A.

M

Mani Subramani

Department of Information & Decision Sciences, Carlson School of Management, University of Minnesota, Minneapolis, MN U.S.A.

A

Alok Gupta

Department of Information & Decision Sciences, Carlson School of Management, University of Minnesota, Minneapolis, MN U.S.A.

Cite This Article

Chengxin Cao, Gautam Ray, Mani Subramani, et al. (2025). Health Information Technology Redeployment from Targets to Acquirers in the Healthcare Industry: The Role of Co-Specialized Human Capital in Value Creation. MIS Quarterly, 1-34. https://doi.org/10.25300/misq/2025/18693

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

You May Also Like