Abstract

Big data analytics (BDA) has shown distinctive advantages on improving healthcare outcomes and reducing healthcare cost. While it also increases consumer’s privacy risk. We thus focus on the question that whether health IT providers should adopt BDA to increase healthcare efficiency in the presence of privacy concerns. We focus on the healthcare wearable device market due to its natural advantages and popularity in healthcare field. Since the consumers has various preferences on the products (horizontal differentiation) with different quality levels (vertical differentiation), we adopt a two-dimensional product differentiation model to investigate the effects of BDA’s efficiency-privacy tradeoff on the competition. Our results demonstrate that health IT providers should adopt BDA technology when their efficiency-privacy tradeoffs are large. Besides, when BDA cost on per unit benefit is small, or the investment has more unit benefit for itself than the rival, health IT providers also should adopt BDA. Our findings provide insights to business managers on how to optimize strategies of BDA adoption. Social planners are also guided to conduct better policies to improve health service quality by promoting BDA adoption in healthcare sector.

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