Inducing Adoption of New Technologies by Network Members

Creating Sub-Network Competitive Advantage

A recent article in the NYT, “E-Records Get a Big Endorsement” by Steve Lohr, describes how hospitals are seeking a competitive edge” by offering subsidies to doctors to join the hospitals’ digital networks:

[I]n addition to federal support for computerizing patient records … [m]any [hospitals] are reaching out to their affiliated physicians — doctors with admitting privileges, though not employed by the hospital — offering technical help and some financial assistance to move from paper to electronic health records…

Big hospitals operators … analysts say, want to use electronic health records that share data among doctors’ offices, labs and hospitals to coordinate patient care, reduce unnecessary tests and cut down on medical mistakes.

But hospitals are seeking a competitive edge, too. Digital links, analysts say, can also tighten the bonds between doctors and the hospital groups that subsidize the computerized records. In most local markets, independent physicians typically have admitting privileges at more than one nearby hospital, and so hospitals compete for doctors as well as patients…

In other words, the government-backed campaign to hasten the adoption of electronic health records has the potential not only to change how health care is delivered. It could also influence which institutions emerge as leaders in delivering care, as some local markets consolidate further…

The subsidy will be 50 percent of the total cost for physicians who simply install electronic health records that can communicate between the doctor’s office, labs and hospitals. But the subsidy will rise to 85 percent of the total costs of digital records for physicians who agree to share data — stripped of personal identifiers — on patient measures that include glucose levels for people with diabetes and post-operative procedures and prescriptions for heart patients. That could help … [hospitals] amass an ever-growing database of evidence indicating which treatments and procedures yield the best medical results…