Blockchain-Enabled Health Information Exchange Efficiency Across South Korean Hospital Networks: A Stochastic Frontier Analysis with Bayesian Model Averaging

Background: South Koreas healthcare system, while technologically advanced, faces persistent inefficiencies in health information exchange (HIE) across its fragmented hospital network. Blockchain technology has been proposed as a decentralised infrastructure for secure, interoperable health data sharing, yet empirical evidence quantifying the efficiency gains attributable to blockchain-based HIE systems at the hospital network level remains absent. Traditional performance metrics fail to distinguish between technical inefficiency (suboptimal use of existing resources) and frontier shifts (technological improvements enabling new performance levels). Objective: To estimate the technical efficiency of health information exchange across South Korean hospital networks and to quantify the efficiency differential attributable to blockchain-enabled versus conventional HIE platforms using Stochastic Frontier Analysis (SFA) with Bayesian Model Averaging (BMA). Methods: We conducted a panel study of 247 hospital networks (comprising 1,842 individual hospitals) across all 17 South Korean provinces and metropolitan cities over 16 quarters (Q1 2021Q4 2024). The dataset was constructed from the Health Insurance Review and Assessment Service (HIRA) claims database, the Korean Health Information Exchange registry, and hospital-reported digital infrastructure surveys. We specified a translog stochastic production frontier with time-varying inefficiency, where HIE output (composite index of data completeness, exchange volume, interoperability score, and clinical decision support utilisation) was modelled as a function of inputs including IT staff, digital infrastructure investment, electronic health record maturity, and network connectivity. Bayesian Model Averaging over 2^18 candidate specifications addressed model uncertainty in covariate selection for the inefficiency determinants equation. The blockchain treatment effect was estimated using a control function approach with Mundlak-Chamberlain correlated random effects to address endogenous adoption timing. Secondary analyses examined whether blockchains efficiency impact varied by hospital network characteristics using a latent class stochastic frontier model. Results: The mean technical efficiency of HIE across all networks was 0.67 (SD = 0.14), indicating that the average network achieved only 67% of its frontier potential output given its input levels. Blockchain-adopting networks (n = 83, 33.6%) demonstrated significantly higher mean technical efficiency (0.78, 95% CrI: 0.750.81) compared to conventional HIE networks (0.61, 95% CrI: 0.580.64), yielding an efficiency differential of 0.17 (95% CrI: 0.130.21). BMA identified blockchain adoption (posterior inclusion probability [PIP]: 0.98), network size (PIP: 0.94), EHR maturity level (PIP: 0.91), and dedicated IT governance structures (PIP: 0.87) as the most robust determinants of technical efficiency. The control function approach confirmed that the blockchain effect was robust to endogeneity concerns (Hausman test p = 0.34). Latent class analysis identified three distinct efficiency regimes: Digital Leaders (24.3% of networks, mean efficiency: 0.84), Transitioning Networks (48.6%, mean efficiency: 0.68), and Digital Laggards (27.1%, mean efficiency: 0.49). Blockchain adoption shifted the probability of Digital Leader classification by 31.2 percentage points (95% CrI: 24.837.6). Conclusions: South Korean hospital networks operating with blockchain-enabled HIE infrastructure achieve substantially higher technical efficiency in health data exchange, with the efficiency advantage persisting after accounting for model uncertainty and endogenous adoption. These findings provide the first large-scale econometric evidence supporting blockchains operational value in healthcare information infrastructure and have direct implications for South Koreas ongoing national digital health strategy and for international health systems considering blockchain-based interoperability solutions.