Cooperation and Competition: The Multilevel Adoption of Electronic Medical Records in U.S. Hospitals
This paper studies the diffusion of Electronic Medical Records (EMR) technology, which is characterized by both network effects and strategic effects. EMR adoption involves several adoption levels. I separate each level to examine their external effects. To capture externalities, I develop a dynamic adoption game, taking the strategic interactions of forward-looking hospitals into account. Using a panel data of U.S. hospitals’ adoption from 1997 to 2009, and applying the methods developed by Bajari, Benkard, and Levin (2007), and Pakes, Ostrovsky and Berry (2007), I recover revenue and cost parameters for each adoption level. The primary finding is that there is a significant complementary effect for the first level adoption and a competitive effect for higher-level adoption. My counterfactual experiment compares a monopoly market and a duopoly market, showing the differences of adoption time caused by strategic interactions.
Recent U.S. policy establishes an incentive program of the adoption of EMR technology. I examine the government’s incentive program for EMR adoption in a policy experiment. The result shows a 5% reduction of cost would greatly accelerate a typical hospital’s adoption, especially the adoption of higher-level EMR. This is the first paper to separately identify and quantify the effects of different adoption levels. The results have policy implications for nationwide EMR adoption, as well as insights for other multilevel and network technology diffusion.
Agglomeration in Certification: The Case of LEED (Leadership in Energy & Environmental Design) Certification for Green Buildings (with Marc Rysman)
Competition may affect not only technology adoption but also the adoption of quality standards. This paper studies the case of LEED (Leadership in Energy & Environmental Design), which is an internationally recognized environmental building certification system. The adoption of LEED certification and green building technology can protect the environment and attract tenants. We examine whether there is a strategic interaction in certification levels. By using a detailed dataset of LEED registrations in the U.S. from 2000 to 2010 and applying the Multinomial Test of Agglomeration and Dispersion (MTAD) developed by Rysman & Greenstein (2005), we find the allocation of certification levels is more agglomerated than independent random choice would predict. Further study shows that certified buildings tend to agglomerate at lower levels, including Certified, Silver and Gold. We also perform an ordered probit analysis of buildings’ choices of certification levels. We find that large buildings are more likely to get a higher certification level, and the level of certification is not significantly trending upward as the total number of certified buildings grows.
Work in Progress
Health Care Quality Improvement and Electronic Medical Records Adoption Level
Congress devoted $19.2 billion to stimulate the adoption of Electronic Medical Records (EMR) in 2009. This paper studies whether the adoption of this technology improves health care quality, as well as the relationship between quality improvement and EMR adoption levels. Using Medicare claim data, and the EMR adoption data for U.S. hospitals, I apply difference-in-difference regression analysis to examine these effects. This study offers important implications for government’s incentive programs and other relevant policies.
Strategic Interaction in a Dynamic Certification Adoption Game