State privacy laws deter EHR adoption in hospitals

EHR adoption has decreased in hospitals in states where privacy laws restrict the ability to disclose patient information, according to a study published in the journal Management Science.

The study looked at 19 states, and shows that states that have enacted medical privacy laws restricting hospitals from disclosing patient information have seen a 24 percent reduction in EHR adoption over a ten-year period, while states without these regulations experienced a 21 percent gain in hospital EHR adoption.

The decrease is most evident in the reduced adoption among networks of hospitals and medical providers, according to the study. In states without these laws, one hospital’s adoption of EHR often spurs other hospitals to follow suit. Specifically, one hospital adopting EHRs increases the likelihood of other local hospitals doing so by 7 percent, according to researchers from the Massachusetts Institute of Technology and the University of Virginia.

Researchers say privacy protection may benefit the diffusion of information-sharing technology if it reassures consumers; however, it may inhibit diffusion of these technologies if it imposes costs on firms that adopt the technology.

The study suggests that there is a tradeoff between achieving fast adoption rates and strong healthcare privacy laws. Policymakers are going to have to choose how much EHR adoption they want and at what cost to patient privacy, the study says.