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A new report from the ILR School at Cornell University raises critical concerns about the role of health information technology (IT) in the financialization of the healthcare industry. The research examines how Silicon Valley and Wall Street investors have profited from health IT systems that have frequently failed to deliver the promised improvements in efficiency and cost savings.
The comprehensive two-part study, titled “Financialization through Health IT”, released on February 13, 2025, highlights the unintended consequences of widespread health IT adoption, with evidence showing that these systems have often frustrated medical professionals and added to the burden on healthcare providers. While the systems were marketed as solutions to reduce costs and improve efficiency, they have instead led to burnout, high quit rates among healthcare workers, and substantial financial losses as hospitals and physician practices struggle to upgrade or retrofit faulty systems.
Rosemary Batt, the Alice H. Cook Professor of Women and Work, led the study, alongside her long-time collaborator, Eileen Appelbaum, co-director of the Center for Economic and Policy Research. The research provides a detailed analysis of how the shift to electronic health records (EHRs) has not only failed to meet expectations but has also created a profitable ecosystem for private equity firms, IT vendors, and data-mining companies that control the systems.
The study traces the evolution of health IT systems back to the Health Information Technology for Economic and Clinical Health Act of 2009, which aimed to make electronic health records interoperable across different vendors. However, nearly 20 years after the law was passed, many systems still struggle with interoperability, despite a legal mandate. Batt notes that only recently have large IT vendors started complying with federal rules, after benefiting for years from taxpayer-funded Medicare and Medicaid.
The research highlights a significant flaw in the implementation process: the federal rules did not require thorough testing or evaluations of these health IT systems before they were put into use. As a result, the costs of implementing and maintaining these systems—ranging from installation to training healthcare workers—are often overlooked, despite evidence that electronic health records have improved billing and internal communications.
However, as the report details, health IT systems have primarily served as platforms for the financial interests of private equity, venture capital, and Big Tech firms. These companies have reaped significant profits without delivering the promised benefits to healthcare providers or patients. Batt cautioned against the integration of unregulated artificial intelligence (AI) into these systems, arguing that the lack of safeguards could further compromise patient privacy and security.
“Behind the electronic health records, data analytics, and financial management systems used by healthcare organizations are private equity, venture capital, and IT firms that have made billions at the expense of healthcare workers and patients,” said Batt. “The unregulated integration of AI will only make it more difficult to protect patients’ rights.”
The report also draws attention to the vulnerability of health IT systems to cyberattacks. With sensitive patient data being stored in centralized databases, healthcare organizations have become prime targets for hackers. In 2024 alone, data breaches exposed the health records of over 200 million Americans. This has led to increased investments in cybersecurity, often involving the same private equity and Big Tech firms responsible for the flawed IT systems in the first place.
As healthcare organizations continue to face challenges in adopting and maintaining health IT systems, Batt and Appelbaum argue that federal regulators must act swiftly to impose safeguards and ensure that future health IT innovations, particularly AI, are implemented responsibly.
“Given the history of health IT implementation and the lack of sufficient regulatory oversight, the current push for AI adoption in health systems should give us pause,” Batt said. “We must learn from past mistakes to avoid repeating them in this new era of technology.”
The reports urge regulators to take a more proactive approach to safeguard patient data and protect against further financialization of healthcare systems. With the growing integration of AI and machine learning, the authors emphasize the need for more comprehensive regulation to prevent exploitation and ensure that technological advancements benefit both patients and healthcare professionals.
Disclaimer: The views and opinions expressed in this article are those of the researchers and do not necessarily reflect the official policy or position of any affiliated organizations. The article is based on the reports “Financialization through Health IT” released by the Center for Economic and Policy Research on February 13, 2025.
