BACKGROUND: The American Recovery and Reinvestment Act of 2009 will provide $36 billion to promote electronic health records and the formation of regional centers that foster community-wide electronic health information exchange (HIE) with the ultimate goal of a nationwide health information network. Minnesota's e-Health Law, passed in 2007, mandates electronic health record and HIE participation by all clinics and hospitals. To achieve these goals, small primary care practices must participate. Factors that motivate or prevent them from doing so are examined. METHODS: From November 10, 2008, through February 20, 2009, we gathered data (through questionnaires and interviews) from 9 primary care practices in Minnesota with fewer than 20 physicians and with varying degrees of electronic health records and HIE involvement. RESULTS: No practice was fully involved in a regional HIE, and HIE was not part of most practices' short-term strategic plans. External motivators for HIE included state and federal mandates, payer incentives, and increasing expectations for quality reporting. Internal motivators were anticipated cost savings, quality, patient safety, and efficiency. The most frequently cited barriers were lack of interoperability, cost, lack of buy-in for a shared HIE vision, security and privacy, and limited technical infrastructure and support. CONCLUSIONS: Currently, small practices do not have the means or motivation to fully participate in regional HIEs, but many are exchanging health data in piecemeal arrangements with stakeholders with whom they are not directly competing for patients. To achieve more comprehensive HIE, regional health information organizations must provide leadership and financial incentives for community-wide meaningful use of interoperable electronic health records.