MIT Sloan Professor Finds State Privacy Laws Hinder Adoption of Electronic Medical Records Up to 30 percent

CAMBRIDGE, Mass., April 13, 2009 — Electronic Medical Records (EMR) allow health providers to store and transfer patient data electronically in place of using paper records. While there is growing evidence that EMR can save money and lives, many people are concerned about the security and privacy of their medical data. President Obama's administration is investing $20 billion to promote EMR nationwide through legislation (“HITECH Act”, S.350) that includes strong privacy protections.

New research from MIT Sloan School of Management Professor Catherine Tucker and University of Virginia Professor Amalia Miller suggests that there is a tradeoff between achieving fast adoption of EMR and strong healthcare privacy. Their research — the first to show how state laws on medical privacy affect adoption of EMR across the nation — finds that strong state-level medical privacy protection reduces adoption by hospitals by up to 30%.

Their evidence suggests that operating under strong privacy laws diminishes hospitals' responsiveness to adoption of EMR by another hospital. The authors found that this may be because privacy protection makes it harder and more costly for hospitals to exchange information with each other. So having privacy protection in place reduces the value proposition of EMR for health providers because they are less able to exchange and transfer patient records.

Tucker said, “Medical privacy is a good thing. So are electronic medical records. Our research has identified a real tradeoff between them. Policymakers are going to have to choose how much EMR adoption they want and at what cost to patient privacy.”

The authors concluded that despite EMR's effectiveness at reducing medical errors and improving baseline indicators of patient health, hospitals are deterred from adopting it by strong healthcare privacy laws. Previously, some health policymakers have speculated that strong privacy protections might help the diffusion of EMR because hospitals would be unable to use EMR unless they could reassure patients that their privacy was being legally protected. However, this study actually finds the opposite.

“Our evidence shows that, while there may be many reasons for states to restrict medical providers' ability to disclose information, there are also potential losses in terms of the speed and compatibility of EMR adoption choices. This could hinder the federal government's goal of 70% adoption of EMR by hospitals by 2019,” said Tucker.

Full paper: http://ssrn.com/abstract=960233

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