This Article Full Text (PDF) e-companion References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via Google Scholar Google Scholar Articles by Miller, A. R. Articles by Tucker, C. Search for Related Content

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

Department of Economics, University of Virginia, Charlottesville, Virginia 22904
MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142
armiller{at}virginia.edu
cetucker{at}mit.edu

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.

Key Words: technology; privacy protection; health IT; network externalities; network effects; hospitals
History: Received: May 2, 2008; accepted: February 16, 2009.