An Analysis of the Adoption of Digital Health Records under Switching Costs

We investigate the implications of a personal health record (PHR) platform on the adoption and sharing of electronic health records (EHR). Through our analysis, we find evidence that health care providers may not have an incentive to share patients’ records electronically even though EHR systems will increase consumer surplus. In this context, independent PHR platforms, by selectively subsidizing the health care providers, can create incentives for the providers to share their patients’ records electronically with other providers. In a pluralistic health care system like that which exists in the United States, where health care providers have varying incentives to implement electronic health records, an online PHR platform can provide a proxy for a ‘national health information network’ wherein consumers can freely exchange their health records among competing providers