Internet-driven productivity growth: The case of hospital radiology services

The dissertation seeks to offer an insight into an issue, much discussed to this day, of whether the large-scale adoption and use of the Internet was behind the spectacular resurgence of business productivity in the United States in the late 1990s. The specific objective is to analyze this issue from a largely unexplored angle - namely, whether this resurgence could at least partially be attributed to what the popular argument refers to as the positive impact of the Internet on the share of business activities organized through the market as opposed to the traditional vertically integrated corporate structure. To accomplish this objective, the dissertation focuses on diagnostic radiology services provided to hospital patients. The rapidly growing penetration of Internet-based teleradiology makes this sector a suitable model for illustrating the processes and relationships associated with the aforementioned impact and exploring its productivity implications. The econometric analysis, based on the data representing utilization of Medicare services from 1990 to 2003, reveals that hospital radiology departments' use of Internet-based teleradiology systems has a positive and statistically significant effect on the volume of interpretations provided using contractual arrangements with off-site radiology practices relative to that provided using the "in-house" resources and that this effect results in positive and statistically significant gains in the departments' productivity.