To Coordinate with or Differentiate From Your Neighbor: The Adoption of Electronic Medical Records by Hospital Systems
35 Pages Posted: 18 Jun 2018
Date Written: June 2, 2018
Billions of dollars have been spent on health information technology (IT), but seamless transfer of health information remains out of reach. This paper seeks to understand the incentive of affiliated hospitals in choosing health IT vendors: using the mostly-adopted product for coordination or otherwise differentiating from the local market. Particularly, their decision is characterized by the tradeoff between the market-leading vendor and the choice of the parent system, when both 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 leading the local market. With the potential endogeneity addressed, the impact from choosing the market-leading vendor becomes even negative. The results suggest that large hospital systems are likely to deviate from the local market, which could create barriers for external information exchange.
Keywords: Electronic Medical Records, Coordination, Differentiation, Strategic Behavior, Technology Adoption, Health Information Exchange
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