HIE 2.0: Data Exchanges Face Consolidation Or Elimination

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This week the Colorado Quality Health Network, one of the nation’s first health information exchange platforms, announced that it would be partnering with 20 other HIEs from across the US to form an HIE trade association. The group hopes to begin pursuing new business opportunities through joint ventures by building national data exchange capabilities. The news is not unprecedented; there are already a small but growing number of similar partnerships working to establish national exchange capabilities in the US. In February 2014, 16 regional HIEs operating in the mid-West announced that they would form a consortium, providing mid-West health systems a broader reach in their efforts to coordinate care. CommonWell, a vendor-led, not-for-profit health information exchange, is also pushing to stand up a national exchange platform.

This very trend was anticipated by ONC leadership as early as 2004, when Dr. David Brailer, the first National Coordinator for Health IT, called for a national health information exchange network to be established. While a truly integrated national HIE would have countless positive benefits for care coordination, the wave of consolidation passing through the HIE market today is not being driven by a desire to improve care. These are business decisions being made by regional HIEs that are struggling to reach financial sustainability.

The sudden explosion of regional HIEs came at the same time that the US was rapidly rolling out EHR technology in its hospitals, and this is because both projects were federally funded through the same piece of legislation. The HITECH Act, passed in 2009, provided hospitals with incentive payments to implement EHRs, and provided states with seed funding to launch regional HIEs. The federal funding made available to states through the HITECH Act was never intended to support HIEs indefinitely. Instead, the goal was to help states install the infrastructure needed to stand up an exchange, with the expectation that each HIE would then develop its own business model to sustain itself.

Thus far, the HITECH stimulus funding has worked as planned and most hospitals now have at least one information exchange partner available to them.  However, the future of HIEs is in doubt. The exchanges have struggled to find a business model that provides financial sustainability. Most exchanges are trying to establish subscription-based business models where the cost of operating is passed on to the hospitals that exchange data through them, but regional exchanges are finding that the economy of scale is not on their side and subscription costs are significant. In Nevada, the state shut down its HIE in January 2014 after failing to generate enough funds to continue operations. Prior to that, DC’s regional HIE closed for the same reason.

Now, as HIEs continue to look for ways of improving their financial performance, partnering with others and scaling up to a national level seems to be the logical next step. There are some tangible benefits that HIEs hope to realize through these partnerships:

  • Economy of scale: spreading the cost of network operations across multiple organizations is expected to reduce overhead costs for each member.

  • Attracting national health providers: through a joint venture, these HIEs hope to win the business of major national health systems that would rather do business with one single entity than with dozens of regional HIEs.

  • Advocacy: the HIE trade group plans to send lobbyists to Washington to advocate for the value HIEs bring to the nation, and the need for prolonged funding.

    HIEs are having unanticipated financial consequences on hospitals as well, making them that much less likely to participate, or pay a significant subscription fee. In Oregon this week, a major interoperability project shut down despite most hospitals being on the same EHR platform. The post-mortem analysis of the failed project found that interoperability simply wasn’t good business for hospitals operating under a fee-for-service reimbursement model. OHSU’s chief health informatics officer explains, “There’s no financial incentive for the providers. In fact, in many cases, the financial incentive is reversed. Better I don’t know that the patient had an MRI a month ago and repeat it because in a fee-for-service world we get paid for the procedures we do, not the ones we avoid.” While HIEs are intuitively a good thing for care coordination and cost control, the complex financial landscape in the US healthcare market is putting their very existence in jeopardy.


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    • Christine

      The reference to 16 states in midwest merging… Is that referring to the Mid-States Consortium of HIOs? If yes, those HIEs are NOT merging, so that would be inaccurate information. They’re simply sharing best practices and working together for cross state info. exchange.

    • Lt. Dan

      Thanks Christine! I’ve updated the article to clarify that Mid-State is a consortium, not a new single entity. According to their press release, Mid-State’s goals are very similar to the newly announced Strategic Health Information Exchange Collaborative, which is why they were included in this story. Their shared goals include: achieving economies of scale by negotiating with vendors as a group, pursuing new funding opportunities collaboratively when doing so gives them a strategic advantage, and advocating for HIEs at both the regional and national level.

    • Wayne Tracy

      I really don’t get why any knowledgeable person would reach the conclusion that HIEs are for real. I’ve been around long enough to remember when up-sate NY was going to implement a CHIN in Rochester – that failed only after spending a lot of money on consulting fees and hardware. Then we broadened the Model and called it a RIN (Regional Health Information Network). Remember the wunderkind named Bailer had it all figured out in Santa Barbara or so the Bush 43 administration thought.

      Please tell me why you think this time (the third major incarnation) will work. It will end in my opinion when the federal dollars run out – and that will end some time soon if congress evaluates the paltry progress made so far. It is pure hubris to think we can do this when ICD-10 has been finished for a decade and we still haven’t gotten it done. In fact we are still not done fighting it!

      The integration issue is not application software the way many ascribe the problem it is the underlying data representation and coding. Comparable data and data analytics won’t be broadly implemented until we get the data representation issue fully resolved. Only then will cross institutional/provider
      comparisons become valid.

      I retired a few years ago having spent most of my career attempting to make progress in advance of what I saw implemented in 1975 at El Camino Hospital where I worked while employed by Technicon Medical Information systems Corp. Hardware and software have come a long way the sociology of the enviroment has not!

    • srinidhi boray

      Interoperability and HIE Imbroglio :- Our scientific investigation was from the point of overarching enterprise architecture and data science dealing with uncertainty (not technology alone, like BigData stack). And, what role it could play in bringing the desired correction in a rather impossible problem, owing to its complexity. When a problem is fleeting; it is called ontological undecidability, with this vexation finding a best possible solution fit to problem is always a challenge given the inadequacies in the existing methods and tools.

      Part A – Healthcare Interoperability Measures:- Cartesian Dilemma (Diagnosis)
      https://ingine.wordpress.com/2015/10/09/cartesian-dilemma-afflicts-the-ehr-incentive-program-compromising-the-mission-of-healthcare-interoperability/

      Part B – Healthcare Interoperability, Standards and Data Science (Resolving the Problem)
      https://ingine.wordpress.com/2015/10/18/interoperability-and-standards/

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