See the video abstract. A full version of the paper is under review at a journal.
Meaningful healthcare security: Does “Meaningful-use” attestation improve information security performance?
Juhee Kwon and M. Eric Johnson
Certification mechanisms are often employed to signal performance of difficult-to-observe management practices. In the healthcare sector, financial incentives linked to “meaningful-use” attestation have been a key policy initiative of the Obama administration to accelerate electronic health record (EHR) adoption while also focusing healthcare providers on protecting sensitive healthcare data. Given the rapid push for safe digitization of patient data, this study examines how hospital attestation influences the occurrence of subsequent data breaches and also how breach performance is associated with penalties from prior breaches. Using a propensity score matching technique combined with a difference-in-differences approach, we analyze a matched sample of 869 U.S. hospitals. We find that hospitals that attest to having reached Stage-1 meaningful-use standards observe reduced external breaches in the short term, but do not see continued improvement in the following year. On the other hand, attesting hospitals observe short-term increases in accidental internal breaches, but eventually see longer-term reductions. We do not find any link between malicious internal breaches and attestation. Further, we find that the interaction between meaningful-use attestation (carrot) and prior failure resulting in penalties (stick) enhances short-term reductions of accidental internal and external breaches. Our findings offer both theoretical and practical insights into the effective design of certification mechanisms and breach regulations.