Contributed by Francois de Brantes/Douglas Emery
Health information exchanges or regional health information organizations have emerged as vehicles to facilitate the flow of clinical information between providers in the community.
The primary business focus of these networks has sought to create value for the provider community by creating productive efficiencies. In doing so, they have been able to generate modest revenue, and therefore have achieved a modest but sustainable business model.
An analysis of the micro and macro environments in which HIEs are emerging suggests that there are other data intermediary roles that could be embraced by HIEs and the communities they serve, and that would provide much higher incremental value to society by significantly reducing information asymmetries with an electronic information network.
HIEs are currently responding to a simple but important need in the market – helping providers with disparate clinical information systems and siloed clinical databases to find information on patients. However, because the macroeconomic environment does not necessarily create a financial stimulus for this information to be shared, HIEs have devised micro-economic stimuli for providers to participate in data sharing and exchange activities. These exchanges reduce some administrative burden for hospitals, labs, physicians and other providers in the community by creating a hub through which this data can be gathered and disseminated.
Providers that have access to the exchange and participate in it, either by paying a transaction fee or subscription fee, have realized internal cost efficiencies that more than offset participation costs. The value created is undeniable, but may have reached a point of diminishing returns, much like productive efficiency in all other industries. Unless the scope of the transactions is expanded or the number of participants is increased, the value created follows a step function with a ceiling, not a constant incremental one.
While important, the net margin realized on transactions may not be enough to pay for the significant capital cost needed to fully participate in and contribute to an exchange, namely the acquisition and use of an electronic medical record system. Adoption rates of EMRs in markets with functional HIEs have not been demonstrably higher than in other markets, which suggests that the production-based efficiencies delivered by the HIE have failed to motivate significant adoption of HIT in physician offices.
The continued inability to encourage widespread adoption of EMRs in all provider settings, including small physician practices, will hamper the true potential that data exchange holds in reducing waste and inefficiencies by, for example, eliminating redundant testing, and increasing care coordination and information sharing. It also will inherently limit the role of the HIEs to clinical data exchange facilitators.
To realize the full potential of IT adoption in healthcare, healthcare organizations should follow two important strategies.
First, they should provide incentives that reduce or eliminate the negative financial consequences of adopting and using HIT. If payers provided financial rewards for providers that delivered higher value healthcare services, they could motivate them to improve their processes and outcomes of care to compete for these rewards.
Payers could base their reward programs on performance reported and achieved by physicians. Special rewards would be given to those who are using EMRs that have been certified by the newly created Certification Commission for Health Information Technology, are compliant with HTSPP and actively participating in an HIE. If payers designed community-wide programs that tied 5 percent to 10 percent of a physician’s income to the quality of care delivered, there would be significant incentives for that physician to adopt the systems of care necessary to achieve stated goals.
Secondly, the role of HIEs should be redefined to improve their financial viability. Imagine that the window of opportunity for HIEs were extended from productive efficiencies to risk portfolio management. The awful truth of the American healthcare system is that while institutions find economic comfort in hoarding data, doing so exposes all to unmanageable long-term risks. HIEs can operate as valued healthcare information intermediaries - so-called infomediaries - in the communities they serve.
While their primary customers now are providers, HIEs could have additional customers for whom they could develop information feedback loops These additional customers are payers, both public and private; third-party application vendors; public health agencies; and pharmaceutical, medical device and other medical technology manufacturers. Each of these customers has a specific interest in accessing clinical data-based feedback loops to better manage their risks.
While many of these self-interest parties are in potential conflict with one another in the healthcare “marketplace,” they can be united by their common interest. The HIE can provide information and create feedback loops to all these customers, not in an attempt to reconcile the varied self-interests, but rather in the simple attempt to create value for each, and thus for society as a whole.
HIEs that can create information feedback loops for customers in their community could easily increase their revenue base to a level where the majority of the fixed and variable costs of managing the exchange are covered. As a result, the transaction (or subscription) costs paid by the participating providers could be significantly reduced and perhaps completely eliminated.
However, to accomplish this critical function, HIEs should constitute themselves as truly not-for-profit organizations that function much like a public good utility. The infomediary functions should not be deployed as a means to profit from that information, but mainly to free information for those who can use it best.