Navigating IoT failure risks in healthcare digital transformation: strategic implications for private and public hospitals

Vollständiger Abstract

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Purpose Against the backdrop of healthcare's ongoing digital transformation as a pivotal industry trend, this paper aims to explore Internet of Things (IoT) technology's role in driving this shift while investigating how potential risks stemming from technology failures shape investment decisions. We focus on analyzing the decision-making mechanisms of both public and private hospitals regarding IoT adoption, shedding light on how technology failure risks influence their strategic choices in pursuing digital transformation initiatives. Design/methodology/approach This paper employs game theory to examine public and private hospitals' IoT adoption decisions, explicitly incorporating the risk of IoT technology failures. Based on a dynamic game framework, we investigate how three key factors – initial medical service utility, mismatch costs and reimbursement ratios – impact competitive healthcare market, patient preference improvement and benefit/profit enhancement across scenarios where public and private hospitals act as market pioneers or followers. Findings Our findings underscore the critical role of strategic IoT adoption decisions in the competitive healthcare landscape, highlighting how IoT implementation success probabilities and patient care mismatch costs directly impact hospitals' profitability and broader social welfare – specifically by shaping resource allocation efficiency and service accessibility. The results reveal that public and private hospitals should tailor their strategies to their inherent strengths (e.g. public hospitals' policy alignment, private hospitals' flexibility), relevant reimbursement policies and expected IoT success rates to optimize outcomes. Furthermore, we emphasize the necessity of incorporating external contextual factors – including stakeholder dynamics, socioeconomic contexts and the specificity of IoT-enabled healthcare services – into strategic decision-making, as these variables modulate the trade-offs between technology risks and transformation benefits for both hospital types. Originality/value This research delivers significant insights for both academia and practice, providing actionable recommendations to optimize the procurement and utilization of IoT services in the healthcare supply chain.