Current market conditions create incentives for some providers to exercise control over patient data in ways that unreasonably limit its availability and use. Here we develop a game theoretic model for estimating the willingness of healthcare organizations to join a health information exchange (HIE) network and demonstrate its use in HIE policy design. We formulated the model as a bi-level integer program. A quasi-Newton method is proposed to obtain a strategy Nash equilibrium. We applied our modeling and solution technique to 1,093,177 encounters for exchanging information over a 7.5-year period in 9 hospitals located within a three-county region in Florida. Under a set of assumptions, we found that a proposed federal penalty of up to $2,000,000 has a higher impact on increasing HIE adoption than current federal monetary incentives. Medium-sized hospitals were more reticent to adopt HIE than large-sized hospitals. In the presence of collusion among multiple hospitals to not adopt HIE, neither federal incentives nor proposed penalties increase hospitals' willingness to adopt. Hospitals' apathy toward HIE adoption may threaten the value of inter-connectivity even with federal incentives in place. Competition among hospitals, coupled with volume-based payment systems, creates no incentives for smaller hospitals to exchange data with competitors. Medium-sized hospitals need targeted actions (e.g., outside technological assistance, group purchasing arrangements) to mitigate market incentives to not adopt HIE. Strategic game theoretic models help to clarify HIE adoption decisions under market conditions at play in an extremely complex technology environment.
Keywords: Game theory; Health information exchange; Market models; Medical record linkage.