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Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records

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Author Info

  • Amalia R. Miller

    ()
    (Department of Economics, University of Virginia, Charlottesville, Virginia 22904)

  • Catherine Tucker

    ()
    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

Abstract

This paper quantifies the effect of state privacy regulation on the diffusion of electronic medical records (EMRs). EMRs allow medical providers to store and exchange patient information using computers rather than paper records. Hospitals may be more likely to adopt EMRs if they can reassure patients that their confidentiality is legally protected. Alternatively, privacy protection may inhibit adoption if hospitals cannot benefit from easily exchanging patient information. We find that state privacy regulation restricting hospital release of health information reduces aggregate EMR adoption by hospitals by more than 24%. We present evidence that suggests that this is due to the suppression of network externalities.

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File URL: http://dx.doi.org/10.1287/mnsc.1090.1014
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 55 (2009)
Issue (Month): 7 (July)
Pages: 1077-1093

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Handle: RePEc:inm:ormnsc:v:55:y:2009:i:7:p:1077-1093

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Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
Phone: +1-443-757-3500
Fax: 443-757-3515
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Web page: http://www.informs.org/
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Related research

Keywords: technology; privacy protection; health IT; network externalities; network effects; hospitals;

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References

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  1. Gautam Gowrisankaran & Joanna Stavins, 2004. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 260-276, Summer.
  2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
  3. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
  4. Marc Rysman, 2004. "Competition Between Networks: A�Study of the Market for Yellow�Pages," Review of Economic Studies, Wiley Blackwell, vol. 71(2), pages 483-512, 04.
  5. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
  6. Daron Acemoglu & Amy Finkelstein, 2006. "Input and Technology Choices in Regulated Industries: Evidence From the Health Care Sector," NBER Working Papers 12254, National Bureau of Economic Research, Inc.
  7. Posner, Richard A, 1981. "The Economics of Privacy," American Economic Review, American Economic Association, vol. 71(2), pages 405-09, May.
  8. Philipp Schmidt-Dengler, 2006. "The Timing of New Technology Adoption: The Case of MRI," 2006 Meeting Papers 3, Society for Economic Dynamics.
  9. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
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Citations

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Cited by:
  1. Avi Goldfarb & Catherine Tucker, 2012. "Privacy and Innovation," NBER Chapters, in: Innovation Policy and the Economy, Volume 12, pages 65-89 National Bureau of Economic Research, Inc.
  2. Catherine Tucker & Amalia Miller, 2009. "System Size, Lock-in and Network Effects for Patient Records," Working Papers 09-07, NET Institute, revised Sep 2009.
  3. Peng Huang & Marco Ceccagnoli & Chris Forman & D.J. Wu, 2009. "Participation in a Platform Ecosystem: Appropriability, Competition, and Access to the Installed Base," Working Papers 09-14, NET Institute, revised Sep 2009.
  4. Gregory B. Cline & John M. Luiz, 2011. "The Economics of Information Technology in Public Sector Health Facilities in Developing Countries: The Case of South Africa," Working Papers 251, Economic Research Southern Africa.
  5. Tatiana Komarova & Denis Nekipelov & Evgeny Yakovlev, 2011. "Identification, data combination and the risk of disclosure," CeMMAP working papers CWP38/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  6. Brant Callaway & Vivek Ghosal, 2012. "Adoption and Diffusion of Health Information Technology - The Case of Primary Care Clinics," CESifo Working Paper Series 3925, CESifo Group Munich.
  7. Fabrizio, Kira R. & Hawn, Olga, 2013. "Enabling diffusion: How complementary inputs moderate the response to environmental policy," Research Policy, Elsevier, vol. 42(5), pages 1099-1111.
  8. David Dranove & Christopher Forman & Avi Goldfarb & Shane Greenstein, 2012. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology," NBER Working Papers 18281, National Bureau of Economic Research, Inc.
  9. Miller, Amalia R. & Tucker, Catherine, 2014. "Health information exchange, system size and information silos," Journal of Health Economics, Elsevier, vol. 33(C), pages 28-42.
  10. Arora, Ashish & Forman, Chris & Nandkumar, Anand & Telang, Rahul, 2010. "Competition and patching of security vulnerabilities: An empirical analysis," Information Economics and Policy, Elsevier, vol. 22(2), pages 164-177, May.
  11. Nadine Rozenkranz & Andreas Eckhardt & Mirko Kühne & Christoph Rosenkranz, 2013. "Health Information on the Internet," Business & Information Systems Engineering, Springer, vol. 5(4), pages 259-274, August.

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