Regulating Vendor Market Concentration: Challenges in Digital Government for Health Information Sharing

Policymakers face a dilemma in determining the optimal approach to regulating highly concentrated markets, especially in the context of digital government initiatives in healthcare. The current study investigates whether vendor market concentration facilitates or impedes efficiency in health information sharing. Utilizing data from the American Hospital Association’s annual surveys and information technology (IT) surveys from 2014 to 2016, we find that the market concentration of vendors, both at the state and county levels, indeed promotes information sharing among stakeholders. Specifically, when more hospitals in a given state or county use the same IT vendors for information sharing, providers exchange a more detailed level of information with a broader range of stakeholders compared to when using different vendors. Furthermore, we found that such facilitation varies among ownership types. Our findings highlight the complexities faced by policymakers in digital government, as restricting vendor market concentration too hastily could hinder the efficiency of information sharing and collaboration among healthcare providers. Additionally, such concentration may, in fact, enhance information sharing, especially for not-for-profit and for-profit hospitals. Overall, understanding the relationship between market concentration and information sharing can help healthcare administrators allocate resources more strategically, leading to better planning and less resource wastage, while aligning operational strategies with broader sustainability goals.