EXPRESS: Unraveling the Transformative Effects of Online Healthcare Consultation Services on Outpatient and Inpatient Costs

Online healthcare consultation services (OHCS) hold immense potential to transform the healthcare industry. This study seeks to investigate the impact of doctors' participation in OHCS on offline outpatient and inpatient costs, addressing a critical yet underexplored area in the healthcare IT literature. Utilizing an exhaustive dataset from a high-level comprehensive hospital in China over a period of 42 months, we find that doctors' OHCS participation increases outpatient costs by 63.2% (¥268.510) and inpatient costs by 22.2% (¥2,365.092). These results remain robust after addressing endogeneity concerns through instrumental variable (IV) approaches and propensity score matching (PSM). Notably, mechanism tests reveal that OHCS participation enhances doctors' service volume expansion, cost-upgrading within services and patient mix changes, leading to induced demand and higher offline medical costs. Moreover, these effects are amplified for doctors with higher professional status. However, the COVID-19 pandemic and higher department crowding levels tend to mitigate these cost increases. This study makes several significant theoretical contributions. First, it expands the healthcare IT literature by uncovering the "dark side" of OHCS participation, showing that it raises medical costs by altering supply-demand dynamics, contrary to the cost-saving potential often associated with traditional healthcare IT. Second, it advances research on OHCS by identifying the mechanisms—service volume expansion, cost-upgrading within services and patient mix changes—through which OHCS participation influences offline costs. Third, it explores the heterogeneous effects of physician, environmental, and departmental characteristics on medical costs. Practically, our findings suggest that hospitals and policymakers should promote widespread OHCS participation to balance supply-demand dynamics, advance treatment standardization and differentiated payment models, establish a multi-dimensional physician performance evaluation system, and leverage AI technology to improve doctor-patient matching and resource scheduling—enabling the realization of online healthcare's potential without inadvertently driving up medical costs. This study highlights the nuanced implications of OHCS on offline healthcare costs, offering insights for improving its implementation in healthcare systems.