The current paper analyzes the diffusion of a Healthcare Information Exchange system. We analyze 2.25 million Emergency Room referrals in seven hospitals during three years since the deployment of the system. We find that social learning within hospitals is a good predictor of physicians’ decisions to use the new system. Similarly, the existence of data on the system, a type of network effects, is also significantly associated with system usage.

The paper contributes by addressing both social-influence and indirect-network-effects and testing their effects empirically. We also show that social influence is much stronger than network effects, as can be expected in the strong professional culture of healthcare. Thus, healthcare organizations that deploy technology should focus on social and organizational influence and invest only gradually in populating data in systems and networks.