21COE, University of Tokyo

MMRC Discussion Paper No. 109

MMRC
DISCUSSION PAPER SERIES

MMRC-F-109

The Effects of Information Technology andOrganizational Change in Medical Organization
The Case of EMR Introduction in Rakuwakai
Associate Professor, Kyoto Sangyo University
Researcher, MMRC, University of Tokyo
Seung-Hwan KU
Associate Professor, Kyoto Sangyo University
Ryoichi KUBO
January 2007

21COE, University of Tokyo

MMRC Discussion Paper No. 109

The Effects of Information Technology andOrganizational Change in Medical Organization– The Case of EMR Introduction in Rakuwakai–
Associate Professor, Kyoto Sangyo University
Researcher, MMRC, University of Tokyo
Seung-Hwan KU
Associate Professor, Kyoto Sangyo University
Ryoichi Kubo
Key words: electronic medical records(EMR), hospital management, information technology,
process analysis, resources-based view

1. Introduction
Hospital management has recently been attracting attention. Many hospitals post losses whileproviding services that are very significant for the lives of citizens 1 . If hospitals are to provide
high-quality services in a stable manner in an aging society, they will have to consider efficiency aswell as fairness in management and policy. In this respect, the government is promoting the1

According to Japan Municipal Hospital Association (2005), deficit-ridden hospitals accounted for 389 hospitals or 32.6%
of 1,195 hospitals responding to a poll. Deficit-ridden hospitals accounted for 88.6% of 631 municipal hospitals, 44.5% of
247 other public hospitals and 43.2% of 317 private hospitals. The operating balance (healthcare service revenues minus
costs) per 100 beds showed a loss of 7,827,000 yen.

1

S. KU and R. Kubo

computerization of healthcare services including the introduction of electronic medical records, or
EMR. Information technology is thus expected to become an effective tool for improving theefficiency of hospital management. Despite the government’s positive recommendation andsubsidization of the EMR introduction, however, the EMR system has failed to spread. Many
hospitals introducing the EMR system have failed to achieve remarkable improvements. Nevertheless,some hospitals have successfully taken advantage of the EMR introduction to realize high-quality
healthcare services and improve management efficiency 2 . Through the analysis of one particularsuccess story for the EMR introduction at Otowa Hospital in the Rakuwakai Healthcare System, thisstudy focuses on the EMR introduction process and aims to find factors behind the success and its
effects.
As information technology spreads in many industries, discussions on such technology’s
characteristics and impact on organizations have been conducted in the context of productdevelopment, inventory management, logistics, business relations, inter-company relations and so on.
As noted by Melville, Kraemer & Gurbaxani (2004), however, the mechanism for IT to influenceorganizational performance has not necessarily been specified. Given that the IT introduction is not a
sufficient condition for competitive advantage, an important challenge is to specify the strategy and
IT introduction process to take advantage of IT’s characteristics to improve organizational
performance.
IT used in the healthcare industry including hospitals and clinics is divided into three categories .
The first is the electronic medical records to make and store electronic data about patients. The
second is the ordering system to electronically transmit medical treatment and dose instructions andreports within a medical organization 3 . The final one is the medical accounting system toelectronically compute medical treatment costs and request receipts. The government now plans torequire the EMR to be introduced 4 . Generally, the EMR is introduced not only to realize paperlessdata management but also to be linked to other information systems for better organizational
performance. Therefore, our discussion here will assume the three systems to have been integrated
into the EMR system 5 .
2

In this study, the successful EMR introduction is defined as representing “the realization of high-quality healthcare
services and the improvement of management efficiency.”
3
The ordering system conveys doctors’ instructions and testing requests to a logistics division through an in-housenetwork .
4
Nihon Keizai Shimbun (2-9-2005)
5
More than 90% of hospitals have introduced medical accounting systems that have direct effects on hospital management.
But not a large number of hospitals have introduced ordering and EMR systems whose effects are still questioned. The
Otowa Hospital subject to this study introduced ordering and EMR systems simultaneously.

2

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

Discussions on the EMR have been widely conducted among consulting companies, EMR
vendors and medical societies. These discussions focus on advantages of information systems.
Medical economics and informatics experts adopt a macro approach to the EMR. They look mainly
to policy and management problems. No approach to the EMR has been analyzed from the viewpointof hospitals that actually introduce and manage the EMR, however. Few studies have been conductedon the EMR introduction process, the effects of the EMR and factors behind successful EMR
introduction at the hospital level.
A conclusive finding of this study is that a factor behind the hospital’s successful EMR
introduction was hospital staff members’ simultaneous implementation of the new IT process andorganizational Changes. An additional significant factor was that a project team comprising
representatives from functional divisions of the hospital studied and analyzed each division’s
operation process thoroughly before the EMR introduction. The process analysis allowed the project
team to review and resolve operational bottlenecks and synchronize the flow of information andpatients. The hospital also made an effort to internalize organizational IT capacity by developing
in-house medical system engineers and customizing software. The combination of these factors
allowed the hospital to take full advantage of the EMR for achieving high-quality healthcare services
and efficient management.
This study consists of five sections. The second section discusses the framework for the casestudy. The third section deals with the history of healthcare policies and the present state of the EMR
introduction. The fourth section outlines the Rakuwakai Healthcare System and its Otowa Hospitalsubject to this case study and describes the history and process of the hospital’s EMR introduction.
Based on the case study and data about the effects of the EMR introduction, the fifth section looks
into the effects from three aspects – organization, staff, and patients and the local community. Finally,
we discuss the factors behind Otowa Hospital’s successful EMR introduction. This study is based on
our five interviews with and visits to Otowa Hospital (in 2004 and 2005).

2. Analysis Perspectives
The relationship between IT and organizations has become a key subject in businessadministration over the recent years. Specifically, studies have been conducted about the effects of IT
on social and economic systems, organizations, tasks, communication and performance (e.g.
3

S. KU and R. Kubo

Crowston & Malone, 1995; Aoshima, 1998; Okuno, Takemura and Shintaku, 2002; Fujimoto et al.,
2002; Takeda, 2000). Regarding the relationship between IT and organizational performance, earlier
studies have agreed that IT is a tool rather than a condition in itself for organizational achievements
and that IT interacts with various elements of organizations to enable high performance.
Recently, the resources-based view has frequently been used for considering IT and various
elements of organizations. The RBV attributes the gap between companies’ performance to thedifference between their resources and capabilities (e.g. Barney, 1991). Similar logic is adopted for
discussing IT-related resources and capabilities (e.g. Mata, Furest & Barney, 1995). As IT-relatedresources and capabilities, Wade & Hulland (2004) that surveyed earlier studies cited the
management of relations with outside organizations, responses to markets, the integration of aninternal organization process and IT, information system introduction plans and management
Changes, information system infrastructure, IT skills and the operation of cost-efficient information
systems. RBV-based studies have focused on key resources or capabilities according to the context
and considered the significance of human resources and organizational capabilities as well as IT
resources.
Figure 1. Model Regarding IT Skills and Organizational Performance

focal firm
IT Resources：
Technology（TIR）&
Human（HIR）
Complementary
Organizational
Resources

IT Business Value Generation Process
Business
Process
Performance

Business
Process

Organizational
Performance

Source: Melville et al. (2004) as revised

Melville et al. (2004) made a simple model of RBV discussions and offered an analysis
framework regarding IT skills and organizational performance (see Figure 1). According to the model,“IT-related resources” comprising technology and human resources interact with “auxiliaryorganizational resources” (non-IT resources, organization structure, policy, routines, culture, etc.) toaffect real business processes or organizational performance. Although the model is based mainly ona business organization, this study builds on this viewpoint, gives attention to the EMR introduction
process and looks for resources and capabilities for the successful EMR introduction in analyzing the4

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

specific case 6 .

3. Medical Policy Changes and Progress in EMR Introduction 7
Basically, the medical industry has been tightly regulated. In particular, the number of doctors,
the number of nurses, the number of beds, equipment, medical treatment fees, building shapes andmany other areas at hospitals are rigorously regulated in accordance with medical subjects and scale.
Since the number of nurses is fixed according to the number of beds, for example, cost reductions are
difficult in an industry where personnel costs are structurally high. In order to increase its
profitability, therefore, a hospital will have to increase the number of patients to be diagnosed every
hour through the improvement and Change of business processes.
The government’s medical policy is shifting its focus from fairness to efficiency in order to copewith an expansion in medical expenditures due to the aging of the population 8 . There are two major
policies in this respect 9 . The first is a division of labor between medical institutions. This means
functions are divided between hospitals (acute and convalescent hospitals) and between hospitals andclinics 10 , depending on the medical condition. The division of functions is designed to allow each
medical institution to provide special services, increasing the efficiency of overall medical services.
The second policy is the medical fee system’s shift from the fee-for-service principle to the diagnosis
procedure combination, or DPC, at acute hospitals. The shift is designed to prevent the problem ofexcessive medical services experienced under the fee-for-service principle and curb overall medical
fees by limiting the fee for a service to a fixed level.
The two policies are closely related to the informatization of medical care through the EMR.
The effective, efficient division of functions between medical institutions requires these institutions
to be able to share patient data in a smooth fashion. For the adoption of the DPC system, eachdiagnosis procedure at each individual hospital must be classified and entered into a standard format.
If paper medical records are used, the classification and standardization may consume a massive
amount of time and costs. The government has these two reasons to subsidize the EMR introduction.
6

Most RBVs focus on elements regarding sustainable competitive advantages. But this study does not cover any
sustainable competitive advantage phase (ex post restrictions on competition: Peteraf, 1993) because it aims to analyze the
EMR introduction, its effects and factors behind its success.
7
See Ku, Kubo and Yamashita (2005) for details.
8
The development of medical services in postwar Japan has given relative priority to fairness (as represented by theuniversal health insurance coverage created in 1961) on the strength of a soaring economy.
9
Other policies include the promotion of evidence-based medicine, or EBM, and the provision of information to patients.
10
Under a system to promote division of functions between hospitals and clinics, medical treatment fees are fixed according
to how frequently referral forms are written by clinics. Medical treatment fees are increased for patients with referral forms.

5

S. KU and R. Kubo

In 2004, only about 4% of hospitals (400 of some 9,000 hospitals) and some 3% of clinics(3,300 of 97,000 clinics) in Japan had introduced the EMR. Of some 800 hospitals with 400 or morebeds, less than 120 or about 14% had adopted the EMR. The EMR introduction has not been smooth(IT Select, May 2005). Many hospitals and clinics suspended the EMR introduction 11 .

4. Process and Impact of EMR Introduction at Rakuwakai Otowa Hospital

4-1. Outline of Rakuwakai Otowa Hospital
Rakuwakai Otowa Hospital is one of core hospitals of the Rakuwakai Healthcare System thathas a giant network in Kyoto. Otowa Hospital has the largest number of beds in the city (at 698 beds),
being ready to treat a wide range of patients from those in the acute phase to those in the chronic
phase 12 . When the hospital opened in 1980, it was specialized for in-patients to meet local requests.
Later, it was transformed into a general hospital. The hospital has increased the number of medical
subjects to 29 and the number of beds to 698 in the pursuit of comprehensive services. In 2000, it
was given a hospital function rating of Composite B. Later, the hospital gradually enhanced its acutefunctions and was certified as Japan's 12th specialized acute hospital in 2002. In 2003, it became thefirst hospital in Kyoto Prefecture to acquire the ISO9001 certification. These certifications indicatethat the hospital has been objectively appreciated as having high-performance testing systems,
meeting requirements regarding high-quality medical services and preparing a mechanism for
maintaining such services.

4-2. Problems at Otowa Hospital before EMR Introduction
The problem that faced Otowa Hospital before the EMR introduction was that operations were
failing to keep up with the increase in the number of out-patients. The largest reason was that the
medical service process (reception, diagnosis selection and instruction, doctors' diagnoses, testing,11

In projects implemented by the Ministry of Economy, Trade and Industry under a Fiscal 2000 supplementary budget forthe promotion of medical institution networks using advanced IT, a medical association in Hisai Ichishi of Mie Prefecture,
Okayama Citizens’ Hospital and a Kobe City medical association suspended the EMR introduction (Nikkei Healthcare
September 2004). Reasons for the suspension included unspecified purposes for the EMR introduction, lack of the EMR
system’s ability to be integrated with existing software, an emphasis put on subsidy acquisitions, an insufficient review ofbusiness processes and greater-than-expected initial costs.
12
A medical institution is classified as a clinic if the number of beds for in-patients is limited to 19 or fewer. An institution
with 20 or more beds is a hospital. Usually, hospitals may be classified as small if the number of beds is limited to 100.
Medium-sized hospitals would have several hundreds of beds. Hospitals having more beds are considered large (IT Select
2.0 Editorial Department, 2005).

6

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

preparation of drugs, billing and payment) was not synchronized with the flow of medical records(searching using batch processing, conveyance and posting) as indicated by Figure 2.

Figure 2. Flow of Patients and Medical Records (pattern diagram)

Reception
Registration cardissued forpatient

Treatment at
specialized bureau

Diagnosis
selection andinstruction

Drugpreparation

Billingaccounting

Testing institution

Accounting &Accounting&
Calculating
Calculating

Prescription drug
Prescription
drug
records
records

Data transfer by
Data transfer
nurses bynursesDoctor’s diagnostic
Doctor’srecords
diagnostic
records

Medical record batch
Medicalprocessing
record batchprocessing

Medical record search
Medicalsearchand record
preparationand preparation

Preparing Medical
Preparing
Medicalrecords
records

Storage
Storage

・→：Flows of operations and patients・Dashed line: Flow of medical records

・・Within dashed line area: Value-adding activities：Waiting (wasted) time for patients

Source: Interviews

The largest problem with paper medical records is the discontinuity attributed to the time gap
between “searching and conveying of medical records” and “diagnoses of patients.” Even after adiagnosis, a patient or a hospital staff member cannot take the next steps (testing, preparation ofdrugs and accounting) until a medical record’s arrival. They are forced to kill time waiting. As aresult, a smooth flow of patients is affected, limiting the number of patients diagnosed. Speedy
medical services for patients cannot be secured. This means that the mismatch between the flow ofpatients and that of information (medical records) leads to the separation of diagnostic steps, wastingof time and limiting of the number of patients diagnosed. In a bid to solve this problem, Otowa
Hospital attempted to optimize each step while failing to fundamentally optimize the whole of thediagnostic process. This has been the same case with other hospitals as well.
A hospital organization has made it difficult for functional divisions to cooperate and7

S. KU and R. Kubo

communicate with each other. A hospital consists of groups of experts including doctors, nurses,
co-medicals (such as pharmacists and medical technologists) and clerical workers. These groups
implement various functions. A hospital thus adopts a flat management divided by function. In
general, hospitals have no clear authorization system to control divisions and have difficulty inintegrating divisions. They have faced a chronic “division and coordination” problem. At hospitals
characterized by a flat management comprising groups of experts, different categories of experts takecharge of medical service steps and barriers have existed between these categories. This indicates thatfunctional divisions have failed to communicate or cooperate with each other. Such operational
problems limits the number of patients that can be diagnosed, lengthens waiting times and causes
congestion in waiting rooms. This leads to a decline in patients’ satisfaction and income at hospitals.
In a bid to solve such a problem, Otowa Hospital tied up with some clinics in 1997 to separate
the out-patients. Earlier, Otowa Hospital had accepted any kind of out-patients. More than 1,000
out-patients had visited the hospital daily. Most of them had failed to bring referral forms to thehospital. Given a hospital’s mission to meet the needs of a wide range of local patients, Otowa had
not been allowed to simply reduce the number of out-patients or abandon the chance to earn income
from out-patients that had accounted for some one-third of total revenues.
Otowa Hospital had thus faced two challenges before its EMR introduction in 2001. One was to“shorten waiting times and secure affordable diagnostic space” to improve out-patients’ satisfaction.
Another was to increase the efficiency of the diagnostic process for out-patients in order to “improvethe capacity to accept out-patients” and expand revenues. The hospital decided on the EMR
introduction as a means to solve the two challenges.

4-3. EMR Introduction Process and Organizational Steps
The Rakuwakai Headquarters took three steps to help solve various out-patient problems.
They were (1) the introduction of the EMR and the creation of a project team (or task force) toincrease the efficiency of the operational process, (2) the development of IT experts andcustomization of EMR software, and (3) the promotion of cooperation between the hospital and otherlocal medical institutions to divide labor.

(1) EMR Introduction Process and Creation of Project TeamThe Rakuwakai Headquarters held the first meeting to consider the EMR introduction in
January 2000. On the agenda at the meeting were operational improvements and structural Changes
8

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

to reduce costs of storing paper medical records, shorten patients’ waiting time and cut unproductive
time in the operational process. Participants discussed the EMR introduction as a specific measure.
Later, a decision was made on the EMR introduction and a project team was launched. The
headquarters took a top-down decision-making approach on making the decision and created the
project team that was given the relevant authority 13 . So as to lend logistic support for the EMR
introduction project, the headquarters raised investment funds, improved staff members’ IT literacy
and trained medical systems engineers.
The project team comprised eight people led by a doctor. The seven other than the leader
represented doctors, nurses, radiological technologists, the clinical laboratory, the pharmacy, themanagement division and the information system division (including medical systems engineers).
The team first documented the whole of the operational process in a bid to review it in its entirety,
analyzing each step and the number of steps followed in each division. The project team members,
who represented different divisions, looked at an operation flow for each division, identified
coordination and workflows between divisions and specified bottlenecks and unnecessary steps. As
indicated by Figure 2, the most serious bottlenecks were found to be at the medical record
preparation step and the batch processing steps before and after the diagnostic steps. The teammembers shared their findings concerning time wasted between steps and gradually devised
solutions.
A process analysis led to the finding that the EMR introduction could cut the number of steps
from 38 to 14 for a medical treatment process for an out-patient. In parallel with these operations, theproject team played a role in providing all hospital workers with EMR introduction information andsolutions continuously. Team members wrote down improvement proposals and decisions on simili
paper and posted such written memos within the hospital on the day after each project team meeting.
This allowed all hospital workers to become aware of the EMR introduction. The team sought otherhospital workers' understanding on the EMR and reflected their opinions in the EMR introduction
plan.
Table 1. Flow of Steps after EMR Introduction

Electronic medical records
OfficeDiagnostic room

Treatment, testing, radiation

13

At a hospital, as an organization of professionals, an objection can easily emerge to the introduction of new systems likethe EMR. This may be because the introduction of a new system can force organization members to change their routine
operations or undertake an extra burden to get used to the new system.

9S. KU and R. Kubo
Appointment after diagnosis↓
Arrival↓Arrival confirmation S↓
Issuing basic slip

S

Inquiry (rate)

Ns↓
Floor worker

S

Diagnosis, services

Dr↓
Writing medical records

Testing instruction Dr ⇔ Testing appointment Dr
↓

Ns
Dr

Blood drawing, testing, photographing↓
Deciding on appointment

Co

↓
Dr

Confirming results↓
Inputting data into receipt computer
S↓
Automatic accounting↓
Delivering out-of-hospital prescription
S↓
End

Note: S (service clerk), Dr (doctor), Ns (nurse), Co (co-medical)
Source: In-house data (made available by Rakuwakai)

10DrAn Analysis of the Effects of Information Technology and Organizational Change at Hospital

Upon the EMR introduction, the hospital adopted a large room layout to accommodate medical
bureaus. In order to solve the problem of insufficient coordination between medical bureaus, thehospital changed the room layout to allow doctors and nurses from different medical bureaus toworker together and increase their communication 14 .

(2) Customization of Software and Development of IT Skills
The benefits of the EMR system were expected to remain limited unless all hospital workers
actually made full use of the system. Therefore, the headquarters conducted a fact-finding survey
about hospital workers’ IT skills and implemented education programs to improve their IT literacy
level. An internal survey at Otowa Hospital in October 2000 found that those unable to use Wordaccounted for 53.2% of nurses, 22.7% of co-medicals and 20.0% of clerical workers (most doctors
were able to use the software). After the survey, Otowa Hospital commissioned Toshiba Corp. to
educate hospital workers on IT skills. Each trainer taught two nurses to improve their basic skills for
operating the EMR system. The hospital thus took preemptive steps to solve problems that could
emerge upon the EMR introduction.
It is also very important for a hospital to customize the EMR software in accordance with its
operations. Otowa Hospital trained nine medical systems engineers 15 to develop customized softwarethat could be easily used by doctors, nurses and pharmacists, instead of ordering a vendor tocustomize the software. (The customization covered an easy-to-see screen, clicking, subjects andother areas 16 .) The hospital’s MSEs have taken advantage of their experience on the medical service
front to develop their capacity to integrate operations at hospitals and EMR knowledge. MSEs’
operations have covered all information systems development including not only softwaredevelopment but also security matters and coordination with clinics.

(3) Division of Labor between Organizations: “Cooperative Relations between Otowa Hospitaland Other Local Medical Institutions”
Even before the EMR introduction, Otowa Hospital implemented an organizational Change to
14

The large room layout is frequently adopted by automakers to activate cooperation and communication between
functional divisions. Engineering teams, or an engineering team and purchasing division representatives, are put into a large
room to work together and promote their communication.
15
This number of SMEs is double the average for large vendors, indicating that Otowa Hospital has substantial organizing
capability. System engineers at vendors are frequently criticized for lacking medical workplace knowledge.
16
Specifically, Otowa Hospital has built on the software of the Kameda Medical Center in Chiba Prefecture for developing
its customized software.

11

S. KU and R. Kubo

transfer most (23 subjects) of the outpatient division to cooperative clinics. The hospital has treatedseriously sick out-patients while leaving cooperative clinics to diagnose less sick out-patients. By
classifying out-patients by degree of sickness for different treatments, the hospital has reduced thenumber of out-patients subject to its services. The EMR allows the hospital to divide labor with otherlocal medical institutions 17 . This is because the EMR allows diagnostic and testing data of patients tobe conveyed without extra cost. One favorable result for Otowa Hospital, is that out-patients havebeen limited to referral or acute patients and the percentage of referral patients has substantially
increased in regard to medical fees. At present, 92 out of 105 clinics in the Yamashina Region of
Kyoto Prefecture are linked to Otowa Hospital.

4-4. EMR’s Impact on Hospital Organization
The shift from paper medical records to the EMR has not only reduced costs but alsobrought about other positive effects attributed to the EMR’s open information and automaticconveyance features. These effects are discussed below in regard to (1) hospital operations, (2)functional staff tasks, and (3) hospital organization and management and patients in the local
community.

(1) Facilitated and quickened operations: As shown in Table 1, the EMR introduction has reduced
the number of procedural steps to simplify operations, allowing the flow of data to be synchronizedwith the flow of people. At the same time as a patient is identified at a reception desk, a personal
computer in a doctor’s office can display data about the patient. The medical record batch processing,the most time-consuming step, has thus been eliminated. As a result, waiting time for patients has
been reduced and the number of patients diagnosed increased. Otowa Hospital had adopted areservation system to cut the average waiting time for an out-patient from 120 minutes to 70 minutes
before the EMR introduction reduced this time further to some 35 minutes.
Following the EMR introduction, the no-value-added time for waiting and preparation of a billafter a diagnostic process was dramatically cut from 34 minutes to 3 minutes. A shorter waiting time
can increase patients' satisfaction. The increased efficiency of operations can lead to an increase in
the number of patients to be diagnosed and in earnings.
17

The regional division of healthcare services through the EMR introduction means that a large hospital assigns cooperative
clinics to treat less sick patients or people subject to continuous services. Although the EMR introduction cost could
become a problem at clinics, they can expect to see a long-term income increase by serving as primary care providers topatients.

12

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

Table 2. Waiting Time between Arrival at Hospital and Departure

Measurement

Average waiting time

October 2000

Average 72.7 minutes(before EMR introduction)（N=4,832）

October 2002

Average 33.6 minutes(after EMR introduction)（N=5,877）

February 2003

Average 36.1 minutes(after EMR introduction)（N=6,482）

Ratio of waiting times of over 1
hour
54.8％

17.8％

18.8％

Source: In-house survey data at Rakuwakai Otowa Hospital

A shorter waiting time has brought about an extra benefit, too. A smaller waiting room is now
sufficient for patients. Earlier, the hospital had to have a large waiting room to accommodate a large
number of waiting patients. Now, however, a 20-seat room is sufficient.

(2) Tasks of Functional Division Staff Members: The number of work steps declined for functional
division staff members. The total number of work steps for an out-patient has decreased by 24 from38 before the EMR introduction to 14. For an in-patient, the number has declined from 18 to 12.
For doctors, the number of work steps has increased by one -- namely data input into the EMR.
But the new step is not so heavy. Rather, the EMR introduction has allowed doctors to save time.
When only paper medical records were available, doctors attempting to check test data and medical
records at night had to go to medical record rooms and search records on their own or ask nurses orco-medicals to bring the records. The EMR introduction has enabled doctors to obtain the necessary
data at any time.
For nurses, paper medical record tasks, such as search, conveyance, writing and transfer, havebeen eliminated. This has allowed nurses to focus on care of patients. Their quality of service forpatients can thus be improved. Using a wireless local area network and laptop computers, nurses canobtain medical records regardless of where they are within the hospital. They are now able to give
appropriate bedside treatment and services for patients as well as in the nurse center. The EMR
13

S. KU and R. Kubo

introduction has brought about surplus workers who can be positioned on the floor for new patient
services. These workers have been given jobs for such new services (including guidance for new
in-patients and talking to patients).

Table 3. Change in Number of Work Steps for Each Job upon EMR Introduction

Doctor

Nurse

Clerk

Co-medical

Total

Paper medical records

5

11

18

4

38

EMR

6

2

5

1

14

Reduction in Number of steps

+1

-9

-13

-3

-24

Source: In-house survey data at Rakuwakai Otowa Hospital

The EMR introduction had no marked effect on the management of drugs and other goods
since the hospital had launched the SPD (supply processing and distribution) inventory management
system before the EMR introduction. But it has contributed to the ability to manage dangerous
articles and the reduction in unnecessary drugs.
Performance of accountants and other clerical workers has been improved as their tasks havebecome simplified and standardized. Surplus workers emerging from the reduction in tasks can beutilized for new operations or services. The hospital can therefore now make more effective use ofhuman resources.

(3) Hospital Organization and Organizational Management: The elimination of handwriting has
allowed transfer, reading and other rudimentary errors to be prevented. Comparing medical errors
before and after the EMR introduction, the number of errors per 10,000 drug prescriptions was morethan halved from 1.10 in 2000 to 0.50 in 2001. This effect is significant because even a rudimentary
error can have a fatal effect on a patient.
The EMR system’s open characteristics, which allow any medical workers within a hospital tofreely access patient data, have transformed medical records that were the doctors’ sole domain into
widely shared data. The possibility of medical records being accessed by people other than therelevant doctors has prompted doctors to change their practices and qualitatively improve medical
records. Doctors now put more data into medical records and more clearly. Otowa Hospital has alsoestablished a medical record audit system.
14

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

The standardization of tasks has worked to improve performance of nurses and clerical workers,
contributing to raising the operational efficiency (see Figure 3). A comparison of nurses’ performance
before and after the EMR introduction indicates that nurses took about one month to get used to theirjobs before the introduction but that this time has been reduced to one week or less following the
introduction (Ku, Kubo and Yamashita, 2005).

Figure 3 Comparison of Performance before and after EMR Introduction (Nurses)

100%

After

90%

Before

70%
30%

5

10

15

20

25

30 Daysdays after
after transfer
transfer

Source: In-house survey data at Rakuwakai Otowa Hospital

Since the EMR introduction, once-frequent billing omissions have been reduced to expand
revenues. Figure 4 shows injection bills’ ratio to total revenues from in-patients before and after the
EMR introduction. This indicates that injection bills have remained at high levels since the EMR
introduction. We can suspect that the elimination of medical record transfer errors and misreading has
allowed the hospital to accurately collect fees that had been lost in billing omissions or remained
uncollected. Such losses and uncollected fees had amounted to 2-3% of total medical fee revenues.
The EMR introduction has thus led to revenue expansion 18 .
Finally, the reduction of work steps through the EMR introduction has contributed to improving
working conditions for hospital workers.
18
Figure 4 data alone cannot indicate any direct cause-and-effect relationship between the “EMR introduction” and “moreaccurate billings.” Through our interviews with hospital people, however, we failed to find any other factor contributing tomore accurate billings. Interviewees said accounting clerks’ transfer and calculation errors have declined following the
EMR introduction. Given that other conditions have remained unchanged irrespective of the EMR introduction, we cansuspect that the EMR introduction has had some correlation with more accurate billings.

15

S. KU and R. Kubo

Figure 4 Injection Billings’ Ratio to Revenues (Accounting clerks)

6

%

EMR
introduction“dŽqƒJƒ‹ƒe“±“ü

5

4

3

2

1

0
1999
4

2000
8

12

4

8

2001
12

4

2002
8

12

4

8

12（month）

Source: In-house survey data at Rakuwakai Otowa Hospital
The Rakuwakai Headquarters’ poll 19 on nurses’ satisfaction with the EMR found that threequarters of nurses were satisfied with the EMR three months after the EMR introduction. Those who
were not satisfied were limited to several percent. Most respondents who were not satisfied were in
charge of surgeries with little connection with routine operations. Therefore, we can suspect that mostnurses engaged in routine operations felt the EMR introduction made it easier for them to work.
Although it is difficult to quantify their satisfaction, we can suspect that the EMR introduction has
contributed to nurses’ work motivation.
A questionnaire survey of doctors on the EMR introduction, which was conducted in October
2004 to ask respondents to choose from five alternatives, found that 16% viewed the EMR
introduction as good, 11% as neutral, 65% as having room for improvement, and 8% as very bad.
Doctors are thus less satisfied than nurses and believe that there is room to improve the EMR system.

(4) Patients and Regional Communities: The EMR introduction has a significant impact on patientsand regional communities as well as healthcare services.
19

The poll was conducted for each medical ward. The number of respondents totaled 234.

16

An Analysis of the Effects of Information Technology and Organizational Change at HospitalFirst, the EMR introduction has reduced financial and time costs for patients. In the case of the
EMR system which is different from handwritten paper medical records, data are input inchronological order. A paper medical record has pages for different departments so that a principal
doctor rarely looks at pages written by other doctors. With the EMR system, the principal doctor caneasily look at data input by other doctors. The EMR system has allowed doctors to multilaterally andcomprehensively check patients’ clinical histories, their testing data and their characteristics. Earlier
testing and other data can be utilized easily. This allows patients to save time and money incurred for
double testing.

Figure 5. Patient Satisfaction after EMR Introduction

Far better
August 2000

No change

Better114

Worse

Far worse

5

143

60

0

2
October 2001

204

161

50

0

3
February 2002

0%

153
20%

148
40%

60%

59
80%

0

100%

Note: Unavailable data include 25 items in October 2001 and 24 in August 2002.
Source: In-house survey data at Rakuwakai Otowa Hospital as utilized by author

Second, the EMR system has improved doctors’ accountability to patients as well as patientsatisfaction. Figure 4 shows patients’ five-score Rickert scale response in August 2000 (n=387),
October 2001 (n=442) and February 2002 (n=322) to the question: “How good are the explanations
given by your doctor?” The figure, though failing to compare data before and after the EMR
introduction, indicates a high degree of patient satisfaction. The average score is as high as 4.1. The
EMR system allows doctors to give explanations to patients while viewing medical records displayedon PC screens. Such explanations are more understandable and give a sense of security, leading to the17

S. KU and R. Kubo

high patient satisfaction. The EMR system is thus used as a tool for communication between doctors
and patients. The improvement in doctors’ information disclosure and accountability to patients andtheir families enables doctors and patients to build relationships of trust, working to boost patientsatisfaction. This may lead to the improvement in hospital brands and ratings. In recent years,
patients have growingly sought to obtain second opinions from doctors other than their primary
doctors. In this respect, the EMR system has made it easier for the other doctors to check medical
records.
Third, the EMR system makes it easier for a hospital to link up with other medical institutions
within a region. As lifestyle-related diseases and other diseases requiring long-term care increase,
longer observation and rehabilitation periods are required. To meet the requirement, a hospital may
refer patients to easily accessible clinics. The EMR system enables a hospital to share patient datawith other medical institutions so that a clinic may refer patients to a hospital more easily. The
optimum division of labor for healthcare services may thereby be achieved for a regional community.

5. Conclusion and Discussion
This study has looked into the process and effects of and factors behind the successful EMR
introduction at Rakuwakai Otowa Hospital. As noted earlier, the number of hospitals that havesuccessfully introduced the EMR system has been limited. General factors behind failures tosuccessfully introduce the EMR system include massive initial and maintenance costs, difficulty incustomizing software, doctors’ views and vague purposes for the EMR introduction. Given that
hospitals receive government subsidies to cover part of the initial costs for the EMR introduction, we
cannot view financial constraints as any fundamental problem. No wide EMR hardware gaps are seen
between hospitals. Our study on the Otowa Hospital case has led us to conclude that organizational
capabilities to utilize the EMR system are a key factor behind successful EMR introduction.
Regarding key resources and capabilities for the utilization of the EMR system, we would likehere to analyze IT resources (technological and human resources) and auxiliary resources to support
IT resources as given in Melville et al. (2004) 20 .
IT resources for the EMR system include operation-based software development capabilities

20

These resources and capabilities are interactive. With a single case, we cannot strictly identify really critical resources orcapabilities for the EMR introduction.

18

An Analysis of the Effects of Information Technology and Organizational Change at Hospitaland training of relevant in-house human resources. No wide EMR hardware gaps between vendors
have been seen. This means that the key issue is whether a hospital can customize software to meetits practical needs. Otowa Hospital has “developed its in-house capabilities to customize software for
EMR-using doctors, nurses and pharmacists, instead of adopting general-purpose EMR softwaredeveloped by engineers unaware of the needs of healthcare operations.” The hospital took sufficient
time to train nine in-house medical system engineers through its unique education program and real
work experience to introduce and customize the EMR system. In other words, the hospital developed
human resources to assess and improve vendor-proposed systems and customize EMR software fromthe viewpoint of users.
In other human resources development efforts, the hospital improved IT literacy of nurses andother employees to respond to routine work changes and troubles arising upon the introduction of the
EMR system as a new technology. Even after the introduction, the MSEs have repeatedly upgraded
the EMR system to account for real work-based improvement proposals and requests.
The first auxiliary organizational resource is an organizational culture created that enables all
hospital workers to be aware of the EMR introduction. The hospital leadership’s clear direction andthe project team’s activities contributed to the creation. Psychological resistance usually emerges to a
new system introduction that requires relevant people to make routine work changes. At Otowa
Hospital, however, the leadership’s clear intentions led all hospital workers to grow aware of the new
IT system’s introduction. In addition, the project team gradually solved operational problems andadopted a permeation-oriented EMR introduction process to allow hospital workers to share thesesolutions and become aware of ways to use the new system. This has enabled the hospital to avoid
any organizational resistance to the EMR introduction.
The second auxiliary resource is the new structure for the hospital’s division of labor with otherregional medical institutions. The EMR system alone has not allowed the hospital to increase thenumber of patients to be diagnosed. Its organizational Change to reduce the number of out-patientsdiagnosed through its division of functions with other regional medical institutions has beensignificant in paving the way for the EMR introduction. Both the organizational Change and the
EMR introduction may have contributed to the facilitation of communication between the hospitaland other regional medical institutions. Activated communication between divisions and between
workers within the hospital through the organizational Change including the destruction of barriers
between functional divisions has also worked as an auxiliary resource.
The EMR introduction process as a whole indicates that a series of efforts including the project19

S. KU and R. Kubo

team’s process analysis, the permeation-oriented EMR introduction process and the customization ofsoftware to front operations were designed to detect problems emerging after the EMR introduction
and solve them before the introduction. The organization has led its members to grasp thesignificance of the new technology introduction to minimize psychological resistance to the newtechnology and relevant problems. The development of software customized to front operations has
prevented software malfunctions, inconvenience and other problems that could have emerged after
the EMR introduction. Given these two points, we may consider prevention of future problems(Thomke & Fujimoto, Front-Loading of Problem, 2000) to be important.
The above discussions have reaffirmed that the relationship between the IT introduction andorganizational performance depends not on the IT per se but the interaction between IT-using humanresources and organizational capabilities. Many hospitals have failed to successfully introduce the
EMR system, while the government is planning to require hospitals to introduce the system. Under
such situation, this study’s achievements may have practical implications regarding how to design the
EMR introduction strategy and process.
Finally, we would like to point to the transfer of knowledge through the large room layout, in
addition to the above-mentioned effects of the EMR introduction. Before the EMR introduction, adoctor of a bureau never checked patients’ diagnostic records written earlier at other bureaus (since
paper medical records had had independent pages for bureaus). Since the EMR introduction,
diagnostic records have been put into the system in chronological order, allowing any medical bureau
to consider other bureaus’ diagnostic records when conducting diagnostics. The EMR includes
patient data ranging from physical conditions to past symptom changes, medical treatments andmeasures. Based on such EMR, doctors naturally get together in a large room to have discussions onpatients. Doctors within a bureau or at different bureaus can exchange information and opinions onsuch matters as the real appropriateness of specific treatments, desirable treatments for specific cases
and meanings of specific symptoms, while watching EMR system screens. As far as indicated byinterviews, the EMR system and the large room layout have allowed doctors to transfer and share
medical knowledge. The EMR system has various potential positive effects including theimprovement of human resources and the activated communication within and between organizations
as well as the increased efficiency of overall operations 21 . Our study has limited our analysis target to
one success story. In future, multiple-case and quantitative analyses may have to be conducted to21
IT’s function as a communication tool is frequently cited for three-dimensional computer-aided design in the productdevelopment process (Baba and Nobeoka, 1998, and Takeda, 2001).

20

An Analysis of the Effects of Information Technology and Organizational Change at Hospital

look into the method for successful EMR introduction.

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An Analysis of the Effects of Information Technology and Organizational Change at Hospital

Appended Table 1. Comparison of Service Processes for Paper and Electronic Medical
Records (for repeat patients)
Paper medical records
OfficeDiagnostic room
Treatment, testing, radiation
Appointment after
diagnosis↓
Arrival↓Old-case reception
S↓
Issuing basic slip
S↓
Searching medical
records
S↓
Inserting basic slip S↓
Conveying medical
records
S→（Outpatients）

Returning medical
records S ←↓Storing medical records
S↓
End

Transfer Ns↓Drip, treatment Ns
Conveying↓
Medical records Ns
Ns

Receiving medical
records (desk)
S↓
Diagnosis orderadjustment
Ns↓
Diagnosis, services
Dr↓
Ns
Writing down
medical records Dr↓
Deciding on next
appointment
Dr↓
Returning medical
records
Ns↓
Conveying medical
records
S↓
Inputting data into
receipt computer S↓
Checking receipt
computerS↓
Accounting
S↓
Delivering
out-of-hospitalprescription
S↓
End

Testing instructions Dr↓
Making and transferring testing requests Ns ⇔Inquiry Ns
Testing appointment Ns↓
Conveying testing requests↓
Blood drawing, testing, photographing Co
Searching previous testing results Co↓
Conveying results Co ←Searching current testing results Co↓
Reaffirming results Dr↓
Box for processed documents↓

S

Recovering results S↓
Searching medical records S↓

Attaching testing results S↓
Storing medical records S
↓
End

23

→

S. KU and R. Kubo

OfficeAppointment after
diagnosis↓
Arrival↓Arrival confirmation S↓
Issuing basic slip
S↓
Floor worker
S

Electronic medical records
Diagnostic room
Treatment, testing, radiation

Diagnosis, services
Dr↓
Ns
Writing
down
medical records Dr↓
Deciding on next
appointment
Dr↓
Inputting data into
receipt computer S↓
Automatic
accounting↓
Delivering
out-of-hospitalprescription
S↓
End

Inquiry (rare) Ns

Testing instruction Dr⇔Testing appointment Ns↓
Blood drawing, testing, photographing Co

Reaffirming results Dr

Note: S (service clerk), Dr (doctor), Ns (nurse), Co (co-medical)

24