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In the United States (US), recent health policies such as the Patient Protection and Accountable Care Act (often abbreviated as ACA for short) emphasized increasing access to care for underserved populations, such as residents in rural areas (Bashshur et al., 2013). Lack of access to health care in rural America is due partly to increasing cost of medical technology (Kohli et al., 2001) and partly shortage of physicians (Thomas et al., 2009).
To remedy these problems, telemedicine—defined as the provision of medical services that involves the exchange of medical information from one site to another via electronic communications for purposes of improving patients’ health status (American Telemedicine Association 2012)—is one promising new technology. Most importantly, telemedicine enables physicians to provide virtual care to patients without being physically located in the area. This can be of great value to rural patients, as they can avoid traveling to urban facilities to receive care (Paul et al., 1999). Significant time and financial costs may be saved.
Yet, the provision of telemedicine requires coordination between physicians and the respective health organizations. Hospitals, clinics, medical homes and other health organizations play a particularly important role. Specifically, they can facilitate the delivery of telemedicine by offering Internet equipment and access, assistance from a nurse or primary care physician, booking and follow-up reservation services (Bergmo 2000). Nonetheless, health organizations may or may not be enthusiastic about telemedicine. The use of a new technology entails changes in workflow and even cultural adjustment (Michea et al., 2002). As such, even though telemedicine can in principle increase the organization’s capacity, adoption of this new technology in rural health organizations is uncertain.
Given this possible resistance to telemedicine, it is useful to provide an analytical perspective that identifies the determinants of telemedicine utilization. The analysis can help administrators implement this new technology more effectively, and with actionable plans for future development. In this context, this paper applies the dynamic capability theory (Eisenhardt & Martin, 2000; Helfat & Peteraf, 2003; Teece, Pisano, & Shuen, 1997; Leung 2013) to analyze a set of preliminary data regarding the utilization of telemedicine in a rural American state. Dynamic capability theory emphasizes organizations’ “fit” with the organization, and is quite suitable for analyzing health organizations in rural America—many of them are facing changing environmental pressures, and need to realign their strategies to handle these pressures.