Journal of AHIMA - May 2012

If private HIEs corner the market on the most profitable services, state HIEs—charged with providing a wider scope of services with a lower return on investment, such as connecting rural providers—are being set up to fail.

This argument was made in a controversial paper published in January 2012 in the Journal of the American Medical Informatics Association by Leslie Lenert, professor of medicine and biomedical informatics at the University of Utah’s School of Medicine. In the paper, Lenert and his coauthors say recent ONC initiatives such as the Direct Project, as well as private HIEs, undermine RHIOs and state HIEs.

“If exchange of data and meaningful use certification can be achieved without connecting to a RHIO, there may be little reason for providers to join one, particularly if RHIOs have higher costs,” the authors state. State HIEs would require a monopoly on the more profitable aspects of HIE in order to offset unprofitable services.

“It is very difficult for public utility model enterprises that have to subsidize activities and provide universal service to compete against free enterprise organizations that don’t have to provide these services,” Lenert said during the March National eHealth Collaborative roundtable meeting, which in part discussed his paper.

Alignment or Bureaucracy?

Another argument for state HIEs is they are uniquely positioned to bring together competitors and connect different private HIEs. The state HIE in the regulator role, establishing a single set of rules for privacy, data exchange, and services fills a need currently lacking in HIE. In Kentucky, all providers and HIEs must sign a participation agreement that enables the standard exchange of information between different systems, Chrisman says.

State HIEs are in a better position to develop both intra- and inter-state exchange, tackling the tough issues in an open public forum regarding patient content, differences in state law, and developing standards around HIE issues like exchange authentication, supporters say. Eventually, this work could be translated into a nationwide connection between states. Some vendors disagree, like Marc Willard, CEO of private HIE vendor Certify Data Systems.

Many health systems cross state lines, which would require those systems to join several state HIEs just to exchange health information within their own systems, Willard says. He believes it is better to leave HIE to the local health systems, which can then connect to a state HIE if they have a need to exchange information with systems outside their area.

“We have five or six health systems that will connect with each other without any state HIE, without any bureaucracy, and they will do that on an as-needed basis,” he says.

State HIEs may be shoehorning themselves into the marketplace, adding an unnecessary layer and offering services that private HIEs could handle themselves, according to Willard.

But while private HIEs may have the technical capability to connect to other private HIEs, they may lack business incentive to do so on a large scale. When private HIEs do link up, it is usu-

ally to serve a narrow business case and not for the type of extensive record exchange that supporters of state HIEs envision.

“The public good is actually about creating a level playing field for grouping information across all organizations, and if we take away the structure to do that we are going to be in more trouble than we think,” Lenert warns.

Private HIE: Focusing on the Business Need

The track record for regional and state HIEs is not a good one. Many have folded, unable to find sustainable business models that support their missions.

Just ask Chris Voigt, senior director at HIE vendor MobileMD, which is owned by Siemens Healthcare. Voigt helped develop and launch the once-promising RHIO CareSpark in the Tennessee area. The RHIO ceased operations in June 2011 after it was unable to develop a solid business model despite a string of government contracts and local provider support.

Voigt also helped ONC develop several national HIE projects like the NwHIN, which has been slow to find users, Voigt says, because it lacks a strong business case.

“I worked with ONC on all the NwHIN projects, and it was a
wonderful thing and we were going to save the world, but no-
body used it, nobody picked it up, not because the technology
wasn’t there but the economics never matched,” Voigt says. “So
why should providers share data and how should they coordi-
nate care with this technology? In the enterprise private space
with our HIEs, there are a lot of financial reasons to do it.”
State HIEs must seek alignment from stakeholders spanning
entire regions when developing their networks. This can be dif-
ficult when developing policies on contentious issues like pri-
vacy and security practices, patient consent processes, and even
fee structures. In Kentucky, KHIE has been working for a year
and a half to conduct a cost analysis and get necessary approval
from legislature before it can charge HIE fees.

Private HIEs don’t have the same restrictions. They can determine their own data exchange standards and fee structures.

Private HIEs typically form between trading partners that have established relationships and are happy to trade data. State HIEs don’t have that luxury, Voigt says, and they usually must reach hard fought consensus between parties, Voigt says.

“When it comes to state HIE, everybody involved is extremely risk adverse, so those HIEs are threatened by such tight control and such low risk exchange that you may even be hurting the patient,” Voigt says. “Because of the decisions people made in the public HIE about taking ‘no risk’ views to exchange, you are actually not exchanging anything, which would be even worse.” For the same reasons, private HIEs can be faster to offer new services and adapt to new business situations, Voigt says.

“We can react extremely quickly here,’” he says.

Lenert asserts that this difference creates a disservice to the patient and the taxpayer; that state HIEs should receive backing to serve as the HIE for a state and not face direct competition with the sometimes self-serving private HIEs. That revenue should drive the health services provided is counter to the goal of healthcare—treating patients, Lenert says.