Does Competition Lead to Agglomeration or Dispersion in EMR Vendor Decisions?
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We examine hospital Electronic Medical Record (EMR) vendor adoption patterns and how they relate to hospital market structure. As in many network technology adoption decisions, hospitals face countervailing incentives to coordinate or differentiate in their choice of vendors. We find evidence of substantial agglomeration on EMR vendors, which increases as hospital markets become more competitive. These findings suggest that incentives to coordinate dominate incentives to differentiate overall, and the relative balance grows stronger in favor of coordination as markets become more competitive. Our findings also have important implications regarding antitrust policy. A potential downside of hospital consolidation—increased obstacles in information sharing due to vendor differentiation—should be taken into account in evaluation of hospital mergers.
KeywordsCompetition Health information technology Network industries
JEL ClassificationI12 O33
This work was supported by a NET Institute (www.netinst.org) research grant. We thank seminar participants at the School of Public and Environmental Affairs and the Department of Business Economics and Public Policy at Indiana University for helpful comments. We also acknowledge the Health Information Management Systems Society (HIMSS) for providing access and assistance to their data and Jean Roth for assistance with the AHA data. We are responsible for all remaining errors.
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