The majority of stakeholders in health information exchanges (HIEs) believe that public HIEs have flawed business models and fail to provide "meaningful connectivity," according to a Black Book survey conducted in the second half of 2013.
Most provider and payer executives believe that private HIEs -- which are operated by a single business entity or network -- are a better choice than public exchanges for accountable care organizations (ACOs). And with six in 10 operational public HIEs dependent on federal funds that have mostly run out, 72% of the respondents predicted that by 2017, as few as 10 of the current public HIEs will still be around.
A key element in this sober assessment is the attitude of payers, which stand to gain the most from effective HIEs that can reduce the cost of care by reducing the number of redundant tests, repeated procedures, and avoidable readmissions. Despite these potential advantages, health insurers participate in just 30% of public HIEs, and 86% of payer respondents said they refuse to pay the annual fees of public exchanges.
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"Payers are determining how they can best manage the HIE ecosystem by gaining access to the clinical data of covered members," said Doug Brown, managing partner of Black Book, in a news release.
"With the majority of hospitals and medical practices fully functional with EHR, reciprocal data flow with payers has been the tipping point to provoke insurers to initiate leadership roles in private HIEs."
BlackBook polled users of 220 operational exchanges, both public and private. Among the respondents were 1,550 providers that use HIEs and 794 payers and insurers.
According to the report, HIE use increased 69% from 2012 to 2013. But 89% of private practices and 73% of non-system hospitals remain unconnected to any kind of HIE. These figures are fairly consistent with those in a recent study published in Health Affairs.
The lack of participation in existing public HIEs appears to be part of what is hampering them. "The problem that's being pointed out [in the Black Book report] is that the public HIEs will struggle to provide value in the marketplace until they reach a certain level of adoption," said David Whitlinger, executive director of the New York eHealth Collaborative (NYeC), in an interview with InformationWeek Healthcare. "You've got to get to a level of adoption in the provider community and a level of data in the network for it to provide value.
"It takes sustained funding to reach that point. That's why you'll see with several public HIEs that their stakeholders may not be supporting them well enough to get to that level of value, and then it falls back to the market."
NYeC, in partnership with the state health department, coordinates the operations of the State Health Information Network of New York (SHIN-NY) and works with the regional HIEs that belong to that network. Whitlinger pointed out that in addition to the federal funding, the state has been very generous in supporting the development of public HIEs. New York Gov. Andrew Cuomo's budget for the impending fiscal year includes a $65 million appropriation to support SHIN-NY, he said.
While SHIN-NY is not yet self-sustaining, Whitlinger said that private payers had underwritten about a third of its cost and that they participate in regional HIEs because they believe the exchanges can decrease the cost of care delivery. In Rochester, N.Y., for example, the community HIE has been instrumental in reducing redundant lab and imaging tests and avoidable ER visits by about 30%. "That's something payers rally around," Whitlinger noted.
The Indiana Health Information Exchange (IHIE), the oldest and one of the most successful public HIEs in the country, is also aiming for critical mass in all of the communities where it provides services, IHIE CEO Harold Apple told us. But IHIE, which uses a subscription model and does not receive government grants, has a different long-term business strategy than SHIN-NY does.
IHIE is transitioning from not-for-profit to for-profit status so that it can expand its operations outside of Indiana, Apple explained. That will allow it to reduce subscription fees by amortizing its infrastructure over a larger customer base.
Initially, he noted, IHIE's value proposition was that it allowed its sponsoring healthcare systems to deliver lab results to physicians quickly and cheaply. Now the exchange is focused on aggregating, normalizing, and analyzing clinical data to help healthcare organizations understand the financial and clinical risks of their patient populations. This ability will be the key to succeeding under the new value-based payment models, according to Apple.
"That's where there's a significant opportunity for us and other HIEs in terms of learning how to derive proactive healthcare from the data that exists," he said. "You can't do that unless you capture it across multiple organizations, because you don't see all of the care a patient gets in one entity.
Private HIEs will never be able to deliver a "holistic record of a patient's experience with the healthcare system," even if they augment the clinical data with claims data, Apple noted. "So I think that transition [to new payment models] is going to make a huge difference in terms of the value proposition of a public HIE."
Whitlinger pointed out that business entities, whether they're payers, providers, or a small group of providers, create private HIEs "to serve a business purpose, and that may or may not serve the public good. It's not expected to. The public HIE model is directly mission-oriented for the purpose of serving the public good."
Ken Terry is a freelance healthcare writer who specializes in health IT. A former technology editor of Medical Economics Magazine, he is also the author of the book, Rx for Healthcare Reform.
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