Abstract

We examine hospital Electronic Medical Record (EMR) vendor adoption patterns and how they relate to market structure. Hospitals have incentives to both coordinate with, and differentiate from, local competitors in their choice of vendors, with some of these incentives even linked to receipt of government subsidies through the HITECH Act of 2009. We find 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 suggest that a potential downside of hospital consolidation, i.e., increased obstacles in information sharing due to vendor differentiation, is a relevant factor that should be taken into account in evaluation of hospital mergers.

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