The Cost of Privacy: A Debate on the Impact of Privacy Laws on Health IT Adoption

June 22, 2009

As the Obama Administration moves forward with plans to modernize health care by encouraging the use of electronic medical records (EMR), some parties continue to raise concerns about privacy. Strong privacy laws may help protect confidential patient information and encourage user acceptance. But strict privacy laws can also impose additional burdens on health care providers and may slow technology adoption. A new study recently published in Management Science attempts to quantify the effect of state privacy regulations on the diffusion of EMRs and finds that strict privacy regulations reduces aggregate EMR adoption by hospitals by almost one-quarter. However, organizations promoting stricter privacy regulations such as Patient Privacy Rights have dismissed the findings as "preposterous."