Journal of Business Research 57 (2004) 1000 – 1011
Just what the doctor ordered
The role of information sensitivity and trust in reducing
medical information privacy concern
Andrew J. Rohma,*, George R. Milneb
a
Marketing Group, College of Business Administration, Northeastern University, Boston, MA 02115, USA
b
University of Massachusetts Amherst, Amherst, MA, USA
Abstract
This paper examines consumer concern regarding the collection and use of personal medical information. The authors investigate
consumer concern in the context of information sensitivity and consumer trust in the organization involved in the collection and/or use of
personal information. Data from a national survey suggest that consumers are most concerned with the collection and use of personal medical
information, such as medical history or medical records. The data also indicate that consumers are less concerned with certain retail
organizations involved in healthcare delivery (i.e., drug stores and grocery stores) using personal information in their marketing efforts, as
compared with other organizations such as insurance firms, employers, and political organizations.
D 2002 Elsevier Inc. All rights reserved.
Keywords: Privacy; Trust; Healthcare; Information
1. Introduction
The Internet is fast becoming an important vehicle for the
delivery of healthcare products and services. Healthcarerelated websites now provide a wide range of information
and opportunities for communication among consumers and
healthcare providers. The online integration of healthcare
records facilitates broad access to patient information and
can potentially provide timesaving or even lifesaving benefits to consumers (Carter, 2000; Pendrak et al., 1998). In
addition, the ability for consumers to order prescriptions
through direct channels is an added convenience that often
saves them money. Recent studies indicate that the online
healthcare industry is expected to expand dramatically over
the next several years. Revenues from online retail sales of
healthcare products, such as prescription and nonprescription over-the-counter drugs, are expected to reach US$18
billion by 2004, with 80% of revenues coming from online
sales of prescription drugs (Enos, 2000).
While online health services afford consumers many
opportunities, broad access to electronic patient information
has already resulted in numerous abuses of patient privacy
* Corresponding author. Tel.: +1-617-3733549.
E-mail address: [email protected] (A.J. Rohm).
0148-2963/$ – see front matter D 2002 Elsevier Inc. All rights reserved.
doi:10.1016/S0148-2963(02)00345-4
in the healthcare field. Several of these abuses and violations, involving drug and grocery retailers, employers,
health maintenance organizations (HMOs), individuals, doctors, and manufacturers of healthcare products, are summarized in Table 1 and illustrate the sensitive nature of personal
medical information. These issues illustrate how unwanted
or unwarranted disclosure and exchange of sensitive medical information can result in situations ranging from unsolicited direct mailings from medical products or service
marketers to damaged careers and reputations.
Against the background of the mishandling of consumers’ personal medical information, research has shown that
consumers do not feel in control. The 1993 Harris – Equifax
survey (Harris, 1993) found that 8 out of 10 respondents
believed consumers had lost control over how their personal
medical information is distributed and used. A recent survey
conducted by the California Healthcare Foundation (2000)
found that 75% of consumers indicated concern about
healthcare firms sharing their personal medical information
with third-party organizations. Additionally, the recent
Health Privacy Project (Goldman et al., 2000) concluded
that online healthcare-related websites do not meet the
minimum fair information practices of providing adequate
notice and consumer control over personal information.
Coincident with the Internet’s growth and growing consumer privacy concerns is the increased regulatory scrutiny
A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
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Table 1
Personal medical information privacy issues
Type of organization
Medical privacy issue
Drug/grocery stores
A national drug store chain and a national supermarket chain provided patients’ medical information to an outside database
marketing firm in order to send prescription reminders and promotional literature for new drugs. Even though the drug
companies never received access to these consumer files, widespread consumer complaints suggested privacy concerns
about the use of their personal medical information (O’Harrow, 1998).
An HIV-positive man sued a drug store chain based on the West Coast for privacy invasion when a pharmacist revealed his
HIV status to the man’s unknowing ex-wife and two sons (Goodyear, 1998).
According to a recent study, 35% of Fortune 500 companies admitted to using personal medical information to make
employment decisions (Linowes, 1996; cf. Pendrak et al., 1998).
In Maryland, 16 state employees sold confidential patient information from the state’s medical database to HMOs
(Valentine, 1995).
A college medical student copied confidential health records and sold them to medical malpractice attorneys (Zitner, 1997).
A patient who underwent psychiatric therapy for sexual dysfunction subsequently received numerous unsolicited mailings
from vitamin and penile implant manufacturers (Silberner, 1997).
A pharmaceutical firm compiled a list of 5 million elderly women who had responded to an advertisement for a bladder
control undergarment. The firm then sold this list to third-party firms who were also interested in reaching elderly
consumers. Although the firm subsequently apologized for its actions, it reiterated that its actions were consistent with
current direct marketing practices (Mowery, 1998).
Employers
HMOs
Individuals
Doctors/medical firms
Pharmaceutical firms
of direct markers’ collection and use of consumers’ personal
information. A recent Federal Trade Commission (FTC)
inquiry into the information practices of commercial websites suggested that although there has been improvement in
online posting of privacy policies, only 20% of sites
surveyed that collect personally identifiable information
conduct fair information practices (Federal Trade Commission [FTC], 2000). The 1998 FTC Report to Congress
regarding online privacy also revealed that 88% of healthrelated commercial websites collected personal information,
while only 14% of these sites disclosed their information
practices (FTC, 1998). In a related effort, the Clinton
administration proposed a plan that would limit healthcare
organizations’ ability to share personal medical information
without consumers’ explicit permission (Abreu, 2000). The
plan suggested federal standards that would limit disclosures
of individuals’ medical records by doctors, hospitals, pharmacists, and insurance companies (Pear, 2000).
In such an environment with legislative action imminent,
healthcare marketers’ ability to build and maintain consumer trust is an important step to reducing consumer
perceptions of risk and concern. Consumers’ sensitivity
towards personal information being collected and used by
direct marketing firms, as well as their trust in these firms,
may well determine the level of consumer concern, and
ultimately, the efficacy of future healthcare delivery. It is
important for direct marketers in the healthcare field, as well
as policymakers, to understand consumer attitudes towards
personal medical information used in direct marketing
efforts. Such an understanding is essential to complying
with proposed federal standards and maintaining consumer
trust. The purpose of this paper is to investigate how
situations of varying levels of trust and information sensitivity affect consumer medical privacy concerns. In this
research, we develop a theoretically grounded medical
privacy framework based on trust and information sensitivity levels, and test hypotheses that suggest when consumers
are more concerned and what types of information or
transactions concern them most.
The balance of this paper is organized in seven sections. In
the next section, we present the personal medical information
framework. As part of this discussion, we review the theoretical basis for individual privacy and the role of trust and
information sensitivity in affecting consumer privacy concerns. In the following section, we develop a set of research
hypotheses. In the fourth section, we describe the methodology used in a national survey of direct marketing consumers.
We then present the study results in Section 5 and discuss the
findings in Section 6. In Sections 7 and 8, we discuss the
implications and future research directions as well as conclusions to be drawn from this study.
2. Personal medical information privacy framework
In Fig. 1, we present a framework that examines the
potential for consumer concern with regard to the collection,
use, and exchange of personal medical information. This
framework portrays consumer privacy concern and perceived risk towards information collection along two dimensions: sensitivity of personal information and trust in
specific organizations to use the personal information they
collect in a fair manner. The framework suggests that
consumers will indicate greater concern and perceived risk
in instances where personal information (such as personal
medical records and medical history) is deemed highly
sensitive and the consumer does not trust the organization
to use their personal information fairly.
Conversely, the figure also suggests that consumers will
indicate less concern and perceived risk in instances where
personal information is deemed less sensitive and the
consumer highly trusts the organization. The potential for
concern and perceived risk is present when the organization
is highly trusted yet the personal information is deemed
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A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
Fig. 1. Personal medical information framework.
highly sensitive, or when the information is considered less
sensitive yet the organization is not trusted. We elaborate on
both of the factors proposed to affect consumer concern and
risk perception, namely, sensitivity of personal information
and trust in the organization.
2.1. Privacy concern
Theoretical research that addresses consumer privacy
concerns has attempted to define ideal conditions where
privacy exists. The idea of consumers having control over
their privacy was first strongly advocated by Alan Westin
(1967), who suggested privacy was the ability to control
personal information acquisition and use. Marketing scholars studying privacy incorporated these ideas. Goodwin
(1991) depicted consumer privacy as a two-dimensional
construct, involving physical space and information. She
defined privacy in terms of consumer control over personal
information disclosure, where information disclosure
addresses how and when consumer information is captured
and stored in databases, as well as the environment in which
the transaction takes place. Foxman and Kilcoyne (1993)
proposed an alternative privacy framework based upon who
controls consumers’ personal information (i.e., the organization or the consumer) and whether or not the consumer is
aware of the actual data collection. Culnan (1995) emphasized that awareness of the collection and reuse of personal
information was important, as well as the ability to exercise
control over reuse of the data by direct marketers. Caudill
and Murphy (2000), in their review of online privacy issues,
similarly suggested that knowledge of data collection and
control of information reuse were central to maintaining
privacy.
In both the direct and online marketing contexts, empirical research suggests that two expressions of control—
awareness of information collection and usage beyond the
original and intended transaction—are the primary influences on consumer privacy concern (e.g., Sheehan and Hoy,
2000). These expressions of control are the basis for the
FTC’s fair information practices of notice, choice, access,
and security. For example, regarding notice and choice,
privacy may be a concern when people are aware that direct
marketers, without their permission, are collecting personal
information and/or they do not know how that information
is being used (Nowak and Phelps, 1995). In the online
context, Cranor et al. (1999) found that whether information
was going to be shared with other entities was the most
important factor influencing consumers’ decision to disclose
personal information.
The privacy frameworks that address consumer control of
personal information (e.g., Foxman and Kilcoyne, 1993;
Goodwin, 1991) have been used to support empirical work
investigating consumers’ privacy concern (e.g., Milne and
Boza, 1999; Phelps et al., 2000; Sheehan and Hoy, 2000) and
willingness to provide marketers with personal information
(e.g., Milne, 1997; Milne and Gordon, 1993; Phelps et al.,
2000). Additional research has shown that consumers are
unaware of organizations collecting personal information
(Culnan, 1995) and organizations’ usage of this information
(Nowak and Phelps, 1992).
Indeed, much of the efforts of the direct marketing
community have been focused on providing consumers with
control of their personal information. The rationale is that
consumer concern will subside by making consumers aware
of information practices and giving them the ability to
remove their name from direct lists. However, research
has suggested that reducing concern through increasing
control might not be as effective as increasing trust (Milne
and Boza, 1999) and understanding when consumers are
willing to provide personal information (Phelps et al., 2000).
A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
In the case of medical information, understanding the role of
trust and information sensitivity is important.
2.1.1. Trust in the direct marketing organization
In the marketing literature, trust has been defined as ‘‘a
faith or confidence that the other party will fulfill obligations set forth in an exchange’’ (Gundlach and Murphy,
1993, p. 41). The role and importance of trust has been
identified as a central tenet to building long-term relationships with consumers (Doney and Cannon, 1997; Morgan
and Hunt, 1994; Smith and Barclay, 1997). Moorman et al.
(1992) view trust as a factor in determining overall relationship quality. Within the database marketing literature,
trust has been suggested as a mechanism with which to
build or strengthen relationships (Campbell, 1997) and as an
important mechanism with which to facilitate exchange
(Milne and Boza, 1999). Milne and Boza show that building
trust is a key element in reducing consumer privacy concerns and improving relationships between consumers and
direct marketing organizations. Trust is developed through
effective communication of privacy safeguards, market
signals such as reputation and credibility, and past consumer
experiences. The development of trust between direct marketers and consumers subsequently reduces consumers’
perceived risk.
Developing and maintaining trust is indeed important in
the healthcare field, primarily because of the benefits and
risks associated with the collection of intimate or sensitive
personal medical information. Wider access to the Internet
and firms’ ability to collect and distribute personal medical
information online among third parties has added to consumer concerns regarding the privacy of personal medical
information. Risks associated with marketers’ collection and
use of personal medical information can include privacy
invasion and the risk of alienating customers, as well as the
personal information abuses illustrated in Table 1. Recent
research has shown that third-party websites that obtain
medical information from health-related Internet sites do not
follow as rigorous privacy practices (Goldman et al., 2000).
On the other hand, short-term benefits to consumers are that
information exchanges might provide firms with a deeper
understanding of their customers and may lead to further
refinements on how products or services are personalized.
Long term, these exchanges might lead to longer-lasting
relationships characterized by loyalty and trust.
Trust in a healthcare organization depends on the subsequent use of the personal information collected. Reasons
for organizations’ collection of personal medical information can involve both healthcare delivery as well as commercial benefits. Pharmaceutical companies often seek
access to patient information in order to recommend proper
treatments. These firms may only be interested in medical
information in the aggregate, and not in individual-level
information. However, some organizations may use this
personal information for direct marketing practices that
require individual-level information.
1003
Information technology developments raise important
questions about the privacy of highly personal medical
information collected online from consumers (Freudenheim,
1998). Recent advances in information technology have
facilitated the ease of personal medical information collection and exchange, resulting in broader medical information
access and dissemination among healthcare providers.
These advances, such as the Internet, have also increased
the risk of both inadvertent and intentional disclosure of
sensitive information (Mowery, 1998; Rindfleisch, 1997),
and may serve to diminish consumer trust.
2.1.2. Information sensitivity
The ease with which information can be collected and
exchanged using the Internet makes the organization’s use
of personal information a very sensitive topic for consumers. Intimate self-disclosures are defined as those that
contain high-risk (as opposed to low-risk) information
(Moon, 2000). Phelps et al. (2000) find that consumers
are more willing to provide direct marketers with demographic and lifestyle information than purchase-related and
personal identifying information, which is considered more
risky to disclose. The consumer privacy literature suggests
that information sensitivity may influence privacy concern
(Jones, 1991; Wang and Petrison, 1993) and subsequent risk
perception. Phelps et al. (2000) and Milne and Gordon
(1993) suggest that the level of consumers’ perceived risk
is based upon the type and sensitivity of the information
requested by the marketer, how the marketer will use the
information, and whether the marketer plans to exchange the
information with third-party firms.
Regarding personal medical information, the issue of
personal privacy takes on greater importance due to the
convergence of databases containing personal medical
information with the Internet’s collection and distributive
capabilities. The distributed and networked nature of the
Internet allows organizations to more effectively and efficiently collect, store, use, and disseminate potentially sensitive information. Potentially sensitive individual-level
medical information may be of value to a wide array of
organizations. Primary benefits managers, insurance companies, and HMOs collect patient information from physicians, hospitals, and pharmacists in order to monitor their
patients’ behavior (Mowery, 1998). Other organizations that
have access to individuals’ personal medical information
may include employers, grocery and drug stores, and
pharmaceutical companies.
Consumers’ medical information can be collected in
many different ways. Sources of medical information can
include calls to toll-free numbers, auto registrations, credit
reports and histories, insurance applications, medical
records, checkout scanners, lists from third-party organizations, Electronic Patient Records, and Internet use. Additionally, longitudinal patient medical records may someday
combine several databases into a single record for individual
patients, creating a universal patient record accessible to a
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A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
wide range of parties (Mowery, 1998). Pharmacy Computer
Prescription Databases (PCPDs) constitute yet another
information collection method. PCPDs document each prescription received by a specific pharmacist. Most PCPDs
can be sorted and searched by information contained in the
prescription, such as the patient’s name and address, telephone number, city and zip code, prescription number and
date, drug type and cost, and insurance provider (if any). On
one hand, the benefit of a PCPD is that it enables the
pharmacist to screen prescriptions for potential drug contraindications and interactions. On the other hand, there are
potentially numerous privacy issues regarding PCPDs,
given the sensitive nature and high commercial value, to
third-party organizations, of the information contained
within PCPDs.
The types of medical information commonly found in
personal files range from relatively nonsensitive—an individual’s height, weight, blood pressure, past illnesses, and
medical treatments such as broken bones—to relatively
more sensitive information regarding fertility, abortions,
mental illness, sexually transmitted diseases, HIV status,
substance abuse, and genetic predisposition to disease
(Rindfleisch, 1997). Although many states currently prohibit the disclosure of disease-specific personal information,
no matter how strict these states’ guidelines, actual drug
prescription records may afford little protection against
unwanted disclosure. In other words, it may be relatively
easy to piece together a person’s current medical condition
through nonrestricted medical information. For example,
prescription records for drugs such as AZT may readily be
identified as treatments for AIDS (Mowery, 1998).
3. Hypotheses
Information sensitivity may depend on the type of
information being collected, used, or exchanged by marketers (e.g., Phelps et al., 2000). Consumers may be more
concerned about disclosing personal or individual-level data
(e.g., personal medical information or history). Phelps et al.
(2000) found that consumers were more willing to provide
marketers with demographic and lifestyle information than
with financial and personally identifiable information. Consumers prefer personal identifiers, such as name and
address, to be kept confidential when they can be linked
to sensitive information. Research suggests that consumers
appear to be more concerned about the collection and usage
of personal information from medical records than about the
collection and usage of information from other sources
(Cranor et al., 1999; Nowak and Phelps, 1995). The FTC
(1996) also noted that financial and medical information are
thought to be more sensitive and therefore in need of special
protection. This leads to our first hypothesis:
Hypothesis 1: Consumers are more likely to be concerned
about organizations obtaining personal information, such as
name and address, from their personal medical records than
from other types of information sources (e.g., catalogs, auto
registration, or insurance applications).
Consumers’ willingness to disclose sensitive information
is closely related to the degree to which they trust the firm
collecting the information (Culnan and Armstrong, 1999;
Milne and Boza, 1999; Vidmar and Flaherty, 1985). When
trust is established, consumers will be less concerned and
perceive less risk, as well as greater benefits, in providing
organizations with personal information than in situations
where trust does not exist. Thus, trust affects the risk –
benefit perception. Milne et al. (1999) showed that experience with and reputation of direct marketing firms were the
two strongest antecedents to consumers trusting firms with
their personal information. Fig. 1 suggests that consumer
concern and risk perception depends upon the type and
sensitivity of information exchanged, as well as the degree
of consumer trust. Consumers are less apt to trust an
organization with which they have not transacted business.
Moreover, because of this lack of trust, they should be more
concerned if unknown organizations acquire more sensitive,
as opposed to less sensitive, information about them. This
leads to our second hypothesis:
Hypothesis 2: Consumers are more likely to be concerned if
organizations with which they have not done business
purchased a list with their personal medical history rather
than a list with other types of information (e.g., name and
address or purchase history by product).
Many online consumers simply do not trust direct marketers that collect information through websites (GVU
WWW User Survey, 1998). This lack of trust in the online
setting is especially important in the healthcare industry, in
which numerous organizations (including retailers) possess
sensitive personal medical information that may be of value
to others. However, Sheehan and Hoy (2000) suggest that
ongoing and mutually beneficial relationships with online
marketers can minimize consumer privacy concerns. This
supports Milne and Boza’s (1999) findings that building a
reputation for fairness and maintaining communication with
consumers is effective towards creating a sense of control
and alleviating privacy concern among consumers. These
findings suggest that consumers are more likely to trust
organizations such as retailers, with whom they have
ongoing or frequent buying experiences. This leads to our
third hypothesis:
Hypothesis 3: Consumers are more likely to be concerned
about organizations with whom they have less frequent
contact (e.g., insurance companies or political organizations) using their personal information in their marketing
efforts than organizations (e.g., drug stores, grocery stores,
or employers) with whom they have ongoing relationships.
Along with experience and type of information collected, consumers may indicate greater levels of trust
A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
with organizations that they believe will keep and use, but
not share, their personal information. This leads to our fourth
hypothesis:
Hypothesis 4: Consumers are more likely to believe it
appropriate for organizations with which they have done
business to keep and use, rather than share, their personal
information (e.g., medical history, name and address,
purchase history by product, or income) with third-party
organizations.
Finally, for organizations with whom a consumer has
done business, we would expect that medical information is
more sensitive than other types of information; thus the
collection, use, and sharing of medical information would
be of greater concern to consumers.
Hypothesis 5a: Consumers are less likely to find it
appropriate for organizations with whom they have done
business to keep and use medical information rather than
other types of personal information (name and address,
product purchase behavior, income).
Hypothesis 5b: Consumers are less likely to find it
appropriate for organizations with whom they have done
business to share medical information with third parties
rather than other types of personal information (name and
address, product purchase behavior, income).
4. Methodology
The data in this study are from a comprehensive
consumer privacy survey conducted during the first
quarter of 1997. The survey was made possible by a
research grant to the second author from the Marketing
Science Institute, as well as support from the Direct
Marketing Educational Foundation, the Direct Marketing
Association, and Metromail. In this section, we discuss
the survey development procedure, response rate, and
response characteristics.
4.1. Survey development
An eight-page survey instrument was developed to
survey consumers’ attitudes toward direct marketing practices. Survey questions were based on a review of the
literature as well as expert industry opinion. The survey
instrument was pretested via expert review (Hunt et al.,
1982). Marketing practitioners experienced in survey
research filled out the survey and made suggestions. Next,
in a regional pretest, 200 surveys were sent to a random
sample of households in three New England cities, of which
173 were delivered. The response rate was 37% (64/173).
We revised the instrument format and items based on our
review of response patterns.
1005
4.2. Survey procedure
Our survey population consisted of a mailing list provided by Metromail consisting of 5003 randomly selected
individuals from known direct mail households. The sample
was selected to reflect US adult age distributions. Following
Dillman (1978), we used a prenotification mailing using a
3 5 postcard and a US$1 incentive with the final mailing.
4.3. Response rate characteristics
Following a month-long collection period, we received
1508 useable surveys and 112 surveys the post office was
not able to deliver. This resulted in a response rate of 31.8%,
well within the acceptable ranges of academic research. The
response rate was also favorable given the length of the
survey and the sensitivity of topics in the questionnaire.
The respondent demographics are shown in Table 2. The
response profile was 64% male, relatively affluent (with
21% having household incomes greater than or equal to
US$75,000), educated (47% college graduates), older (51%
over 50 years of age), politically conservative (41%) or
Table 2
Respondent demographics
N
% of
Respondents
Sex
Male
Female
917
510
64
36
Household income
< US$35,000
US$35,000 – US$75,000
>US$75,000
415
588
269
33
46
21
Education
Less than high school graduate
High school graduate or equivalent (GED)
Some college, but not degree
College graduate
Postgraduate
57
311
400
427
262
4
21
28
29
18
Age
Less than 30 years old
30 – 49 years old
50 years old and over
130
587
738
9
40
51
Political philosophy
Conservative
Moderate
Liberal
579
668
170
41
47
12
Computer usage
Use computer at home
Do not use computer home
711
797
47
53
Purchase history
Purchased by mail in last 6 months
Purchased by phone in last 6 months
Purchased by Internet in last 6 months
988
818
107
74
63
10
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A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
moderate (47%), and computer familiar (47% used computers at home). Because our sampling frame was based on
one database marketer’s national mailing list, the respondent
profile differs from a national profile of direct mail consumers (Direct Marketing Association, 1998). These differences may affect the generalizability of the findings.
4.4. Nonresponse bias
In assessing nonresponse bias, we first compared early
and late respondents (Armstrong and Overton, 1977) for
differences among demographic variables and direct
response activity. The first 75% of returned surveys were
compared with the last 25% on specific demographics, such
as age, gender, education, and computer use, as well as
across 40 key constructs. No significant differences between
early and late respondent groups were found for all 44
Bonferroni-adjusted comparisons (Hair et al., 1995).
In addition to comparing early and late respondents, we
were able to compare the differences between respondents
and nonrespondents using background information from the
original mailing file. To facilitate this comparison, each
mailed survey contained a unique identification number that
matched up to a data file with selected demographic data
(except for name and address). When using this file to
compare between respondents, no differences were found
for age, gender, or income. Respondents, however, were
found to come from households that exhibited a higher
propensity to respond to direct mail offers than did nonrespondents. This does not appear to be problematic since it
is very likely that this type of bias exists for most mail
surveys.
4.5. Survey measures
The topics we examine in this paper cover issues
pertaining to personal medical information. The descriptive
results are presented in the next section. To test our
hypotheses, we analyzed respondents’ concern (and per-
ceived appropriateness) for specific direct marketing practices involving medical data. A series of questions were
asked about marketing practices characterized by varying
levels of trust and information sensitivity. The level of trust
was influenced by whether the consumer had done business
with the organization or not, and how the information
collected would be used. The type of information collected
differed by the level of sensitivity. The exact wording of
the survey questions used to test the hypotheses is shown
in Appendix A.
5. Study results
In this section, we first report the descriptive results from
the study. Then we report the results of the hypothesis tests.
5.1. Descriptive results
Table 3 reports respondents’ perceptions and concerns
regarding an organization’s ability to obtain ‘‘name and
address,’’ ‘‘information regarding products purchased,’’ and
‘‘purchase details like price and date.’’ In contrast to other
sources of information reported in this study, most respondents do not believe or are unaware that organizations can
obtain personal information from medical records. However,
in terms of consumer concern levels, information from
medical records is deemed the most sensitive. Note also
that personal medical information can be obtained from all
other sources (e.g., toll-free calls, auto registration, credit
reports and histories, insurance applications, the Internet,
and store scanner data). The results in Table 3 indicate
moderate concern regarding organizations obtaining
information regarding products purchased (44% of total
respondents) or purchase details (44% of total respondents)
from medical records. Respondents indicated significantly
higher levels of concern (88% of total respondents) regarding organizations obtaining their name and address from
medical records.
Table 3
Consumer beliefs and concerns regarding personal information collection
List from other companies
Credit reports or histories
Internet usage
Auto vehicle registration
Calls to toll-free numbers
Insurance applications
Medical records
Checkout scanners
From the following sources, do you believe
organizations can obtain your
Would you be very concerned if organizations could
obtain the following from these sources
Name and
address
Information regarding
products purchased
Purchase details
like price and date
Name and
address
Information regarding
products purchased
Purchase details
like price and date
Base
%
Base
%
Base
%
Base
%
Base
%
Base
%
1430
1426
1421
1410
1426
1434
1408
1416
91
80
79
71
65
64
41
41
1183
1207
1187
1213
1219
1255
1263
1247
53
38
43
23
28
17
10
35
1046
1098
1075
1131
1132
1178
1221
1179
51
38
42
23
25
15
11
34
1390
1392
1388
1391
1389
1392
1393
1387
68
80
65
78
71
81
88
66
1308
1345
1297
1339
1317
1343
1368
1301
44
50
42
44
44
43
44
43
1298
1337
1280
1333
1308
1338
1362
1287
45
50
43
44
43
42
44
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1007
Table 4
Consumer sensitivity towards personal information collection and use
Name and address
Purchase behavior by product
Medical history
% who think that organizations
they have done business with
have their personal information
% very concerned if business they did
not do business with previously purchased
a list with the following information
Base
%
Base
%
Base
%
Base
%
1460
1460
1460
99
46
18
1374
1386
1374
33
34
87
1272
1125
1129
83
63
17
900
986
1003
21
19
2
In Table 4, we report consumer sensitivity towards
personal information collection and use. Specifically,
respondents were asked if they thought ‘‘organizations
they have done business with have their personal
information,’’ would they be ‘‘concerned if businesses
they did not do business with previously had purchased a
list with the following information,’’ and ‘‘what type of
information is appropriate for organizations with which
you have done business to keep and use or share.’’ Less
than one fifth of respondents think that organizations they
have done business with have information about their
medical histories.
In contrast, 87% would be very concerned if businesses they had not previously done business with
purchased this information. The more concerned respondents are about information sharing, the less likely they
are to deem it appropriate for outside organizations (those
they had not done business with) to keep or share their
information.
In Table 5 we asked respondents how ‘‘concerned are
you with organizations using personal information they
acquire in their marketing efforts’’ and ‘‘do you trust
organizations to use personal information fairly.’’ Several
types of organizations gather information from which they
can make medical inferences. The obvious sources,
employers and insurance companies, raise more concern
than do nontraditional information collectors such as grocery stores and drug stores. Respondents indicated low
levels of trust for all sources, although employers earned
relatively higher levels—possibly due to present employment laws and regulations.
Table 5
Consumer concern and trust in organizations’ use of personal information
% very concerned with
organizations using personal
information they acquire in
their marketing efforts
Employers
Insurance
companies
Drug stores
Grocery stores
What type of information is appropriate
for organizations with which you have
done business to
% who trust
organizations to
use personal
information fairly
Base
%
Base
%
1436
1465
63
58
1406
1421
38
17
1441
1450
43
36
1404
1415
21
16
Keep and use
Share
5.2. Hypotheses testing
To test the hypotheses, we performed a series of z tests.
To test Hypothesis 1, we compared concern about obtaining
name and address from medical records (88% very concerned) with concern for obtaining name and address from
each of the other seven sources listed in Table 3. In support
of Hypothesis 1, we found statistically significantly lower
percentages of consumers very concerned about the following sources: lists from other companies (z = 12.74,
P < .01), credit reports or histories (z = 5.76, P < .01), Internet usage (z = 14.29, P < .01), auto vehicle registration
(z = 7.04, P < .01), calls to toll-free numbers (z = 11.11,
P < .01), insurance applications (z = 4.93, P < .01), and
checkout scanners (z = 13.78, P < .01).
To test Hypothesis 2, we compared concern about
purchasing a list with personal medical history information
(87% very concerned) with concern about purchasing a list
with names and addresses (33%) and purchase behavior by
product (34%), as shown in Table 4. In support of Hypothesis 2, we found statistically significantly lower percentages of consumers very concerned about name and address
(z = 59.93, P < .01) and purchase behavior by product
(z = 58.82, P < .01).
To test Hypothesis 3, we compared concern for organizations using acquired information, as shown in Table 5.
Mixed support was found for Hypothesis 3. While grocery
stores (36% very concerned) and drug stores (43% very
concerned) have lower concern levels among respondents
than insurance companies (58% very concerned), concern
about employers was high (63%) and thus contrary to
expectations.
To test Hypothesis 4, appropriateness of keeping and
using information was compared to appropriateness of
sharing the information, as shown in Table 4. In support
of Hypothesis 4, respondents found it more appropriate for
organization to keep and use, rather than share, information
for name and address (z = 28.78, P < .01), purchase behavior by product (z = 20.42, P < .01), and medical history
information (z = 11.58, P < .01).
Finally, to test Hypothesis 5a, the appropriateness of
keeping and using medical history information was compared to the appropriateness of keeping and using other
types of information. To test Hypothesis 5b, a similar
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A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
comparison was made for sharing information. These
results are also shown in Table 4. Strong support was
found for both hypotheses. A significantly statistically
higher percentage of concern was found for keeping and
using medical history information compared to name and
address (z = 32.31, P < .01) and purchase behavior by
product (z = 22.29, P < .01). Likewise, a significantly statistically higher percentage of concern was found for sharing
medical information compared to name and address
(z = 13.23, P < .01) and purchase behavior by product
(z = 12.42, P < .01).
6. Discussion
This study suggests that a majority of consumers express
high levels of concern and low levels of trust when it comes
to organizations collecting, using, and sharing these consumers’ personal medical information. Based upon the
framework shown in Fig. 1, instances in which highly
sensitive information is collected or shared by organizations
that consumers do not trust with this information will lead to
greater levels of consumer concern and perceived risk in
disclosing personal information. On the other hand, instances in which less sensitive information is collected or shared
by organizations that possess greater levels of consumer
trust will result in lower consumer concern and perceived
risk in disclosing this information.
The results presented here suggest that consumers’ personal medical history is deemed more sensitive than other
types of information typically collected by direct marketers.
This finding is based upon significantly higher levels of
concern reported in this study for medical history information purchases by third-party organizations, significantly
lower percentages of respondents reporting that it is appropriate for firms to both keep and use as well as share
personal medical history information, and greater levels of
concern regarding direct marketers’ ability to obtain personal information such as name and address from medical
records.
Several types of organizations gather information with
which they can make medical inferences. The results
presented here also suggest that certain organizations, such
as employers and insurance companies, raise more concern
than do information aggregators such as grocery stores and
drug stores. Given certain retailers’ (e.g., drug and grocery
stores) ability to generate relatively greater trust—possibly
because of the frequent patronage and purchase cycles
characteristic of these businesses—these firms must also
work to maintain this trust through direct marketing practices. These practices may include communicating clear and
unambiguous information privacy policies that offer the
consumer protection of and control over their personal
information. This is particularly true with regards to more
sensitive types of personal information. The occurrences
depicted in Table 1, notably the issue regarding the
national drug store chain, illustrate the implications when
retailers violate consumer trust with regards to the privacy
of their personal information. An alternative explanation
for why consumers may indicate greater levels of concern
towards employers’ use of their personal information
involves the perceived power of the organization itself.
Individuals may perceive their employers as possessing
greater power and potential influence within the healthcare
context rather than grocery or drug stores (Bodenheimer
and Sullivan, 1998).
The public’s attitudes towards personal medical information sharing and exchange may indeed be divided between
the users of such information and the individual consumer
and information provider. As Dr. Margo Goldman, member
of the Coalition for Patients’ Rights, stated that ‘‘the
American people are being told that to get top-notch healthcare there is something to be given up, (and) that something
is privacy’’ (Thurman, 1998). The trade-off and debate
regarding the use of personal medical information exists
primarily between the rights and privacy concerns of the
individual and the interests of the healthcare provider and
involved parties.
Congress has recently proposed various bills in an effort
to balance the needs of healthcare providers (e.g., doctors
and HMOs), insurers (e.g., employers and benefits managers), and pharmacies to share and exchange medical
information, with the consumer’s need for information
privacy. The Clinton administration had made recommendations to Congress regarding personal medical privacy. The
former Health and Human Services Secretary had also
recently recommended to Congress several personal medical
privacy guidelines that attempt to balance the need for
individual privacy with external interests such as medical
research, public healthcare, cost containment, and law
enforcement (Silberner, 1997; Washington Post, 1997).
Additionally, the Health Care Personal Information Nondisclosure Act of 1998 was proposed to balance protection
from unauthorized use of protected healthcare information
with efforts to promote high-quality healthcare through the
confidential sharing and exchange of personal medical
information.
On the other hand, a section of the recent patients’ rights
bill introduced by the House of Representatives, known as
the Medical Information Protection Act of 1998, provides
healthcare organizations the right to disclose or sell patient
information. This provision would allow hospitals, HMOs,
pharmacies, doctors, and insurers to disclose patient
information to health plan providers in order to manage
patient cases and determine ratings for healthcare plans.
The critics of more stringent information privacy guidelines argue that these guidelines add unnecessary complexity to the prescription dispensing and patient communication
process. Critics also argue that these guidelines may potentially reduce a pharmacy’s ability to identify and target
specific patients with pharmacy care follow-up efforts.
Further, they state that stricter guidelines could potentially
A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
reduce the ability of physicians, insurers, and other healthcare providers to coordinate treatments through patient
information sharing (Frederick, 1998). Resulting time
delays and excessive privacy-protection hurdles to information access and sharing could be to the detriment of the
patient (Rindfleisch, 1997).
The challenge remains to overcome consumer concern
regarding certain direct marketing practices, including unauthorized exchange of personal information with third-party
entities. Privacy concern levels and perceptions regarding
proper information disclosure seem dependent on the specific interests and motives of the entity or organization
involved. From the consumer’s view, an individual may
face several threats to his or her medical information
privacy, including insider abuse, accidental disclosure,
insider curiosity, insider subornation, secondary users, and
outsider intrusion. These perceived threats may lead to
heightened concern regarding personal medical information
privacy.
Developing a policy that balances marketers’ information
needs and consumers’ privacy concerns requires taking into
account marketers’ information gathering practices and
specific information contexts as well as being cognizant of
the trade-offs that occur in marketing transactions (Milne
and Gordon, 1993; Phelps et al., 2000). The optimal balance
between consumer information privacy and the organization’s need to collect personal medical information may
ultimately be affected by several factors, including consumer privacy interests, healthcare provider and research
interests, government policy, and increasingly sophisticated
information collection and exchange mediums, such as the
Internet. The underlying issue is that many of these factors
may in the end prove to be both beneficial and detrimental
to consumers’ medical information privacy.
1009
as antecedents influencing perceived risk and concern
regarding information disclosure. The framework presented
in Fig. 1 illustrates four risk and concern states that are
based upon organizational trust and information sensitivity.
It is important for researchers to consider these two factors
in association with consumers’ privacy concerns. Managerially, these results highlight the importance of trust in the
organization and personal information sensitivity in influencing consumer concern regarding medical information
collection and use. This study is also important because it
suggests that certain types of retailers (e.g., drug stores)
represent important links in the healthcare delivery system
in terms of over-the-counter sales of medical products as
well as prescription fulfillment.
In interpreting these results, it is important to realize that
this survey represents respondents from the database of a
national list marketer. Because of differences in the demographic profiles, the overall response may not fully project
to the entire US population. Participants’ health, which was
not included as a variable in this study, may have influenced
sensitivity and concern regarding personal medical information privacy. Future research examining individuals’
concerns regarding the privacy of their personal medical
information could consider participant health as a study
variable. Also, in fairness to the issue of consumer concern,
this study did not require consumers to consider the tradeoff of privacy protection versus healthcare quality and
efficacy. Future research could take this potential trade-off
into account as well. Moreover, the measurement of phenomena relied upon single items. Nevertheless, despite these
limitations, the data do provide an important representation
of the consumers’ perspective on personal medical information and privacy as marketers and policymakers evaluate the
effectiveness of current information control and privacy
practices.
7. Implications and future research directions
8. Conclusion
This research makes two primary contributions to the
direct marketing literature. First, this study is one of the first
to investigate consumer privacy concerns regarding personal
medical information collection, use, and exchange. These
findings are particularly important given the current and
potential future influence of the Internet and database
marketing on individual privacy concerns in the healthcare
industry. Second, this research examines consumer concern
in the context of two dimensions, information sensitivity
and trust in the organization collecting personal medical
information, where privacy concern is a function of both
information sensitivity and trust. The findings suggest that
consumers are less apt to be concerned when personal
information perceived as sensitive, such as personal medical
information, is collected by organizations that they trust,
such as grocery stores and drug stores.
Theoretically, this research is important because it links
personal information sensitivity and trust in the organization
This study reported data from a national survey that
examined consumer concern towards the collection, use,
and exchange of personal medical information used in direct
marketing efforts. Consumer concern levels were based
upon a framework involving sensitivity of information
collected as well as the trust in the organization itself. The
results indicate that consumers are most concerned with the
collection and use of personal medical information (i.e.,
from medical histories or records) as compared to other
types of information collected by direct marketers. These
results also suggest that a majority of consumers indicate
high levels of concern and low levels of trust with regard to
organizations collecting, using, and sharing their personal
medical information. Instances in which sensitive information is collected or shared by organizations that consumers
do not trust with this information leads to greater levels of
consumer concern and perceived risk in disclosing informa-
1010
A.J. Rohm, G.R. Milne / Journal of Business Research 57 (2004) 1000–1011
tion. Instances in which less sensitive information is collected or shared by organizations that consumers do, to a
greater degree, trust leads to lower consumer concern and
perceived risk in disclosing information.
Appendix A. Survey questions to test study hypotheses
(Hypothesis 1) Would you be very concerned if a
company could obtain your name and address, type of
products purchased, and purchase details from the
following sources?
(Hypothesis 2) If a company you did not previously do
business with purchased a customer list, how concerned
would you be if the list contained the following
information about you?
(Hypothesis 3) How concerned are you with different
organizations using personal information they acquire
from you in their marketing efforts?
(Hypotheses 4, 5a, and 5b) What type of information is
appropriate for organizations with which you have done
business to: (1) keep and use to further its relationship
with you, (2) not keep at all, (3) share with other
organizations, (4) not share with other organization?
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