Privacy protection and technology diffusion: The case of electronic medical records

Privacy protection and technology diffusion: The case of electronic medical records

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Article ID: iaor200969107
Country: United States
Volume: 55
Issue: 7
Start Page Number: 1077
End Page Number: 1093
Publication Date: Jul 2009
Journal: Management Science
Authors: ,
Keywords: information
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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