Chapter 8

The Impact of Information Technology

on Productivity and Quality of Life
Overview
• Memahami dampak teknologi informasi pada produktivitas dan
kulaitas hidup
• Memahami bagaimana mengurangi dampak negatif dari
kesenjangan sosial
Objectives
• As you read this chapter, consider the following questions:
• What impact has IT had on the standard of living and worker
productivity?
• What is being done to reduce the negative influence of the digital
divide?
• What impact can IT have on improving the quality of healthcare and
reducing its costs?
• What ethical issues are raised because some entities can afford to
make significant investments in IT while others cannot and thus are
blocked in their efforts to raise productivity and quality?
Contents
• The Impact of IT on the Standard of Living and Worker
Productivity
• IT Investment and Productivity
• The Digital Divideal
• The Impact of IT on HealthCare Costs
 The Impact of IT on the Standard of Living and
Worker Productivity
• Gross domestic product (GDP)
– Measurement of the material standard of living
– Equals total annual output of a nation’s economy
• Standard of living in U.S. and developed countries
– Has improved for a long time
– Rate of change varies as a result of business cycles
• Productivity
– Amount of output produced per unit of input
– Measured in many different ways
• United States
– Labor productivity growth 2% annually
– Living standards have doubled about every 36 years
– Modern management techniques and automated technology increase productivity
• Innovation
– Key factor in productivity improvement
– IT has an important role
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 IT Investment and Productivity
• Relationship between IT investment and productivity growth is complex
– Rate of productivity from 1995 to 2005 is only slightly higher than the long-term
U.S. rate
– Possible lag time between:
• Application of innovative IT solutions
• Capture of significant productivity gains
• Other factors besides IT influence worker productivity rates
• Difficult to quantify how much the use of IT has contributed to worker
productivity
• Factors that affect national productivity rates
– Business cycles of expansion and contraction
– Outsourcing to contractors can skew productivity
– Regulations make it easier to hire and fire workers
– More competitive markets for goods and services
– Difficult to measure output of some services
– IT investments don’t always yield tangible results

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IT Investment and Productivity
(cont’d.)

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IT Investment and Productivity

• Telework/Telecommuting
– Employee works away from the office
– Advances in technology enable communications
– Highly skilled workers demand more flexibility
– Laws passed to encourage telework
– Organizations must prepare guidelines and policies
– Some positions are not suited to telework
– Some individuals are not suited to be teleworkers

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 The Digital Divide
• Standard of living
– Level of material comfort measured by the goods, services, and luxuries available
• Digital divide
– Gulf between those who do/don’t have access to:
• Cell phones
• Personal computers
• The Internet
– Gulf among age groups, economic classes, and cities/rural areas
• Digital divide must be bridged to improve resolution of:
– Health emergencies
– Crime emergencies
– Other emergencies
• Access to IT and communications technology:
– Enhances learning
– Provides educational and economic opportunities
– Influences cultural, social, and political conditions

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 The Digital Divide (cont’d.)
• Education Rate (E-Rate) program
• Created by the Telecommunications Act of 1996
• Goal to help schools and libraries obtain:
• Access to state-of-the-art services and technologies
• Discounted rates
• Supported with up to $2.25 billion per year from fees charged to telephone
customers
• Administered by the Universal Service Administrative Company (USAC)
• Has not gone well but continues today
• Low-cost computers for developing countries
• One Laptop per Child (OLPC)
• Provides low-cost laptop computers for education
• Classmate PC from Intel
• Eee notebook from Asus
• Mobile phone
• Tool to bridge the digital divide
• Costs less than PC and more broadly available

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The Impact of IT on Healthcare
Costs
• Rapidly rising cost of healthcare is major challenge
– Spending increasing at 6.3% per year
– Grow from $2.6 trillion to $4.6 trillion by 2019
• Increase (above inflation) due to new medical technology
– Diagnostic procedures and treatments
– Patients sometimes overuse medical resources
• Patient awareness must be raised
• Technology costs must be managed
• Improved use of IT can lead to cost reductions

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 Electronic Health Records
• Electronic health record (EHR)
– Computer readable record of health-related information on an individual: patient
demographics, medical history, family history, immunization records, lab data,
health problems, progress notes, medications, vital signs, and radiology reports
– Summary of health information generated by each patient encounter in any
healthcare delivery setting
– Effective use of EHR improves patient care and reduces costs
• Lack of patient data transparency results in:
– Diagnostic and medication errors
– Ordering of duplicate tests
– Compromise of patient safety
– At least 98,000 people die in hospitals each year due to preventable medical
mistakes

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Electronic Health Records (cont’d)
• Health Information Technology for Economic and Clinical Health Act
(HITECH)
– Requires government to develop standards for nationwide exchange and use of
health information
– Provides $20 billion in incentives
– Saves $10 billion through improvements in quality of care
– Strengthens protection of identifiable health information

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Use of Mobile and Wireless Technology
in the Healthcare Industry
• Healthcare industry is a leader in adopting mobile and wireless
technology
• Means to access/update EHR at bedsides
• Scan barcodes to match patient with medications
• Communicate with healthcare employees

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 Telemedicine
• Employs modern telecommunications and information technologies
• Provides medical care to people who live far away from healthcare
providers
• Store-and-forward telemedicine
– Acquires data, sound, images, and video from patient and transmits to medical
specialist for evaluation at a later time
– Does not require presence of patient
• Live telemedicine
– Requires the presence of patient and healthcare provider at the same time
– Involves a video conference link between the two sites

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Telemedicine (cont’d.)
• Use of telemedicine raises new ethical issues:
– Must physicians providing advice to patients at remote location be
licensed at that location?
– Must healthcare system be required to possess a license from a state in
which it has a virtual facility?
– Must minimum set of technology standards be met?
– What sort of system certification and verification is necessary?
– Does patient involvement with remote doctors have negative impact on
the local doctor’s relationship?

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Medical Information Web Sites for
Laypeople
• People need reliable information on a wide range of medical
topics to:
– Learn more about healthcare services
– Take more responsibility for their health
• Web sites are not substitutes for professional medical advice,
diagnosis, or treatment
• Some healthcare providers and employers offer online tools that
go beyond basic health information

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Lesson Summary
• Memahami dampak teknologi informasi pada produktivitas dan
kulaitas hidup
• Memahami bagaimana mengurangi dampak negatif dari
kesenjangan sosial
Unit Summary
• Gross national product (GNP) measures material standard of living
• Progressive management uses IT to innovate products, processes, and services
• Telework opportunities can be used to:
– Reduce costs
– Increase productivity
– Reduce organization’s carbon footprint
– Prepare for potential local or widespread disasters
• The digital divide exists:
– Between more and less developed countries
– Within countries, among:
• Age groups
• Economic classes
• People who live in cities versus those in rural areas
• New information technologies can be used with little capital cost to reduce the digital divide
• Healthcare costs are soaring out of control
– 6.3% annual growth rate
– Will reach $4.6 trillion by 2019
• Improved use of IT in the healthcare industry can lead to significantly reduced costs
– Electronic health records (EHRs)
– Telemedicine
– Web-based health information
Question & Answers