Study finds consumer medical data breaches can cause consumers to switch providers and increase gym visits

Junyuan Ke and Weiguang Wang, both of the University of Rochester – Simon Business School and Natasha Zhang Foutz, Associate Professor of Commerce at the University of Virginia, have written Heterogeneous Consumer Response and Mitigation toward Healthcare Data Breach: Insights from Location Big Data. Here is the abstract:

Data breaches pose grave dangers to consumers, brands, and society. In particular, healthcare data breaches are most costly ($7.1 million each) and damaging, as the breached data are irrevocable, and consumers face limited alternatives and daunting switching costs. Only a handful of studies have examined the immediate impact of retail data breaches. This research hence presents an initial, population-scale evidence of consumers’ heterogeneous responses to a healthcare data breach, and social disparity underlying such response heterogeneity, in both shorter- and longer-terms. Leveraging the University of Washington Medicine breach as a natural shock, novel location big data, and a multitude of methods (GIS, machine learning, DiD), the analyses of 11.4 billion location records from a quarter of the Seattle population over a year reveal profound and long-lasting impacts of the data breach on consumers. 77% reduced visitation by 18% and the impact persists even after 10 months. The strong response heterogeneity, involving brand switching (9%), diversification (20%), category withdrawal (9%), and interestingly even a shift toward a healthier lifestyle, reveals an alarmingly stronger impact on the disadvantaged, including the consumers with reduced agility, greater need for healthcare, or limited access to alternatives, hence calling for more personalized, targeted, and equitable mitigation-in-marketing.

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