Health Information Technology Capital Intensity and Hospital Financial Performance: Evidence from U.S. Hospitals, 2018–2023

Background: U.S. hospitals continue to invest in digital infrastructure, yet evidence on how health information technology (HIT) capital investment relates to financial performance, particularly after COVID-19, remains mixed.Objective: To estimate associations between HIT capital intensity and hospital profitability from 2018 to 2023, assess nonlinearity, and test whether associations differed during the COVID-19 years. Methods: Using the RAND HCRIS hospital panel (3,480 hospital-year observations from HIT-reporting hospitals, 2018–2023), we defined HIT capital intensity as HIT-designated capital stock divided by total assets. Primary analyses estimated year-specific regressions with HIT-intensity quintiles and spline specifications for nonlinearity, adjusting for hospital size (log total assets) and teaching status. Pooled models incorporated year fixed effects and HIT-intensity interactions with a COVID indicator (2020–2021). Sensitivity analyses included alternative winsorization (5th/95th percentile), hospital-fixed effects, and placebo tests using non-HIT fixed-asset intensity.Results: Reporter rates ranged from 24.6% (2018; 545/2,212) to 19.4% (2023; 982/5,063). In year-specific quintile models, the highest HIT-intensity quintile (Q5) was associated with lower winsorized total margin versus Q1 in 2018 (β = −0.055; p = 0.008), 2019 (β = −0.042; p = 0.016), and 2023 (β = −0.034; p = 0.010), with weaker estimates in 2020–2022. In pooled interaction models, higher-intensity hospitals exhibited a lower margin gap outside COVID years (e.g., Q5: β = −0.041; p < 0.001) with partial attenuation during COVID (Q5×COVID: β = 0.032; p = 0.073). Hospital fixed-effects estimates for quintiles were not statistically significant (Q5: β = −0.015; p = 0.438). A pooled 5/95 winsorization robustness check remained negative for Q5 (β = −0.029; p < 0.001). Placebo analyses showed similar patterns for non-HIT fixed assets (Q5: β = −0.032; p = 0.006). Conclusions: Higher HIT capital intensity is associated with lower profitability at the upper end of the intensity distribution in some years, with suggestive attenuation during COVID-19. However, the fixed-effects and placebo results are consistent with time-invariant confounding or broader capital-intensity dynamics rather than HIT-specific causal effects. Policies targeting financially constrained hospitals may help sustain digital investment while protecting financial stability.