Does Competition Lead to Agglomeration or Dispersion in EMR Vendor Decisions?

36 Pages Posted: 11 Oct 2016 Last revised: 25 Jun 2018

See all articles by Seth Freedman

Seth Freedman

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Haizhen Lin

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: November 1, 2016

Abstract

We examine hospital Electronic Medical Record (EMR) vendor adoption patterns and how they relate to hospital market structure. As in many network technology adoption decisions, hospitals face countervailing incentives to coordinate or differentiate in their choice of vendors. We find evidence of substantial agglomeration on EMR vendors, which increases as hospital markets become more competitive. These findings suggest that incentives to coordinate dominate incentives to differentiate overall, and the relative balance grows stronger in favor of coordination as markets become more competitive. Our findings also have important implications regarding antitrust policy. A potential downside of hospital consolidation -- increased obstacles in information sharing due to vendor differentiation -- should be taken into account in evaluation of hospital mergers.

Keywords: Electronic Medical Records, EMR, Competition, Agglomeration, Network, Technology, Hospitals, Coordination, Differentiation, Mergers

JEL Classification: I12, O33

Suggested Citation

Freedman, Seth and Lin, Haizhen and Prince, Jeffrey, Does Competition Lead to Agglomeration or Dispersion in EMR Vendor Decisions? (November 1, 2016). NET Institute Working Paper No. 16-19; Kelley School of Business Research Paper No. 16-73. Available at SSRN: https://ssrn.com/abstract=2848579 or http://dx.doi.org/10.2139/ssrn.2848579

Seth Freedman (Contact Author)

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Haizhen Lin

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

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