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12/28/2007
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E-Health Industry Struggling To Find Sustainable Business Models

An annual survey also found that the government is no longer the top provider of startup funding, as 53% of all initiatives received startup funding from hospitals.

At least 125 communities in the United States are working on improving health and health care through secure data exchange, but many are finding obstacles in their way to sustainable business models, according to a survey out this month.

The nonprofit eHealth Initiative (eHI) recently released its "2007 Fourth Annual Survey of Health Information Exchange at the State, Regional, and Community Levels." The survey examined 130 communities' efforts regarding electronic health records.

The survey found that 32 programs are operational, 68 are working on implementation, and five have stopped moving forward. Five other programs failed to respond to the survey.

The greatest barrier to health information exchange appears to be a lack of a sustainable business model, eHI reported. Fifty-six percent of respondents said they had significant difficulty establishing an effective business model, while 35% characterized the challenge as "moderately difficult."

Still, the number of programs considered operational has increased from 26 in 2006.

Among those that are operational, 84% exchange information on outpatients, 73% exchange information regarding laboratory results, 64% exchange inpatient information, and 63% exchange radiology results. About 75% deliver lab results to customers electronically, while 63% use electronic formats for clinical documentation.

More than a quarter of e-health initiatives offer services for improving health through disease or chronic care management (32%), quality improvement reporting for clinicians (29%) or purchasers (26%), and reporting lab results for public health agencies (28%), the survey found.

The survey found that reimbursement systems, which reward volume and fragmentation, also make it difficult for stakeholders to create sustainable business models.

Half of the operational initiatives responding to the survey received advance funding from the federal government and receive ongoing revenue from nongovernmental sources, including hospitals (58%), private payers (46%), physician practices (46%), and laboratories (33%), according to eHI. Three-quarters no longer need grants to survive.

The survey further found that the government is no longer the top provider of startup funding, as 53% of all initiatives received startup funding from hospitals. Forty-four percent received advance funding through federal grants and contracts, and 43% received funding from states. One-third received startup funds from private sources, according to the survey.

"The role of local efforts is critical in improving the quality and safety of health care in the U.S.," Janet Marchibroda, CEO of the eHealth Initiative, said in a prepared statement. "In addition to national focus on both standards and financing to address sustainability, both leadership and collaboration among multiple stakeholders at the community level is needed to build social capital for information sharing, share the costs of an infrastructure that benefits everyone, and facilitate the flow of the clinical information needed for care delivery -- much of which resides locally."

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