To Coordinate with or Differentiate From Your Neighbor: The Adoption of Electronic Medical Records by Hospital Systems
39 Pages Posted: 18 Jun 2018 Last revised: 28 Feb 2019
Date Written: February 2, 2019
Billions of dollars have been invested in health information technology (IT), but the seamless transfer of health information remains out of reach. This paper seeks to understand the incentives of affiliated hospitals in choosing health IT vendors. Particularly, their decision is characterized by the tradeoff between the local market-leading vendor and the choice of the parent system, when they are different. I develop a discrete-choice model to evaluate the effect of each factor. Using a nationwide sample of affiliated hospitals from 2006 to 2010, I find that the system-dominant vendor is much more desirable than the vendor that leads the local market. With potential endogeneity addressed, the impact from choosing the market-leading vendor becomes even negative. The results suggest that large hospital systems value integration to a much greater extent and may tend to deviate from the local market, which could create barriers to building an interoperable health care system.
Keywords: Electronic Medical Records, technology adoption, compatibility, coordination, competition, strategic behavior
JEL Classification: I11, I18, L13, L15, O33
Suggested Citation: Suggested Citation