Health Information Exchanges, Part 2: The IT Challenges
The establishment of Health Information Exchange programs will be a big growth opportunity for information technology providers. Cracking that market won't be easy, though. Aside from the money require to put the initiatives into motion, the HIE technology market right now appears wide open, and no single IT provider has captured a significant share of the business.
Part 1 of this two-part series discussed data access, data safety and other legal issues related to linking healthcare providers through networks.
In an economy where automobiles are essential, information about car performance and cost is readily available. With a few computer keystrokes a prospective buyer shopping the "previously owned" car market can trace the history of a vehicle through multiple owners and across state lines.
Now there is a major national program underway to similarly track individual health records as people move around the country. The portable health records initiative, known as "Health Information Exchange" (HIE), is designed to create electronic linkages among doctors, hospitals, clinics, insurance firms and others. HIE presents a big opportunity to improve healthcare delivery by making critical information available wherever, and whenever, it's needed.
The establishment of HIE programs will be a big growth opportunity for information technology providers. One indication of the potential market is the US$1.3 billion the U.S. Department of Health and Human Services (HHS) awarded in grants between February and June for the development of HIE. With nearly $1 billion being devoted to these programs simply as "seed money," the initial and continuing investments by healthcare providers themselves in HIE could be many times that much.
A Moving IT Target
But cracking that market won't be easy. The HIE technology market right now appears wide open, and no single IT provider has captured a significant share of the business. The major reason is that HIE is still in the development stage.
"Vendors will have to sort through many factors in approaching the market. Right now it's kind of a scramble for everybody because the market and the HIE process is still evolving," Lynne Dunbrack, program director at IDC Health Insights, told CRM Buyer.
Technology firms seeking to serve the HIE market must deal with three major factors:
- Program Structure: In its basic form, an HIE program involves the automation and exchange of records between, say, a group of doctors and a single hospital. However, HHS, as well as state governments and various health care organizations, envision a broader scope for HIE operations -- one that involves networks made up of multiple healthcare delivery sites within a city, a region, or a state. But after these requirements are met, there is no one-size-fits-all framework for an HIE. As a result, different communities will create different structures. Some may involve clinical labs or pharmacies, for example while others may not. Some will operate as public agencies, such as city-hospital based organizations, while others may be privately owned and operated. One HIE may involve 200 doctors while another may involve 1,000.
- Technology Issues: Given the structural differences among HIE programs, technology adoption will also vary. Different data management programs used by different doctors and healthcare facilities will need to mesh with each other. Then there's the issue of whether one component of an HIE network should take the lead in IT procurement, or if procurement should be a collaborative process. Importantly, HHS requires that recipients of federal grants and incentives related to HIE development meet national standards on such issues as technical compatibility, privacy and data integrity. Formulation of those standards is still underway, and promises to be a continuing process.
- Sustainability: With just over $1 billion in federal assistance, it appears that HIEs will have adequate front-end funding. But when the assistance ends, finding the funds to continue operations will be a challenge. HIE participants initially will be establishing another cost center within their operations -- just like a new radiology center in a hospital becomes an expense until it is fully amortized. Efficiencies related to improved use of healthcare records, more precise treatment of patients and reducing re-admission costs resulting from better treatment information should eventually improve cash flow -- but the ability of HIE operators to remain viable until return on investment is assured is a major issue.
States at Center of Market
State governments will have a major role in the creation of HIEs. In distributing $564 million in its state cooperative grants program, HHS required recipients to develop a statewide HIE strategic plan, provide technical assistance, reduce barriers, foster cooperation among participants, and facilitate governance and accountability. While those requirements are directed toward establishing a basic level of quality and some consistency in HIE development, they could stymie innovation among mature HIE organizations which are well ahead of the states in their level of expertise.
"We've seen situations where a state wanting to make sure it touches base with all possible constituents includes some agencies in HIE planning that have only a marginal connection to health IT with results that are actually counterproductive," Jason Hess, general manager for clinical research at KLAS Research told CRM Buyer.
Structural issues are also a concern. "Some states may gravitate towards a single HIE within that state while others may allow for multiple HIEs. It looks like the frameworks are going to vary all over the place," Hess said.
The pace of development also will vary, since some states have already developed significant IT competency regarding HIEs, while others are less prepared. "Some statewide efforts will take time to get off the ground," Dunbrack observed. She noted that many conflicts could arise, especially between HIEs that are already operating and the governance standards that will be issued by states. Also, "enterprise" HIEs -- that is, privately operated organizations that integrate data exchange across all components of the healthcare enterprise -- are likely to be the fastest-growing segments of the HIE market. Enterprise HIEs will likely be more nimble and free to make decisions than HIEs associated with potentially slow-moving government agencies, she added.
Centers Have Role in IT Choices
Another factor which could have a major impact on the HIE market is the role of Regional Extension Centers (RECs), modeled after the longstanding federal agricultural extension program. HHS has completed distribution of $642 million in federal grants to 60 RECs. Each center is charged with providing a broad range of technical assistance to doctors, hospitals, rural clinics and other primary healthcare providers.
RECs are authorized to provide guidance in workflow design, adoption of electronic health records (EHR) and HIE network development. HHS specified that extension centers should develop capabilities in IT vendor selection and group purchasing.
"I think commercial IT vendors looking to the HIE market will have to keep their eyes on all the components involved, including health providers, state agencies and HHS. But if there's one component that might emerge as a strong factor in how the technology will be shaped for the IT procurement process I would look at the regional extension services," Jennifer Bordenick, CEO of eHealth Initiative, told CRM Buyer.
The financial health of HIEs will be a continuing challenge for technology vendors. With limited budgets, state grants could dry up quickly, and the massive funds being provided by federal programs are only for start-up expenses.
A "successful" HIE could point to financial viability because of revenues generated from participanting doctors and hospitals.
"But revenue for one entity is a cost for another," explained IDC's Dunbrack, noting that hospital and doctor contributions to HIEs become operating expenses for those same healthcare providers. And those providers will need to see some significant efficiencies or clinical benefits related to HIE to maintain continuing support.
Provider competition is another factor. A hospital with an efficient IT system may be reluctant to cooperate in setting up a data network with a competing hospital with lesser IT capabilities in building an HIE for fear of losing a marketing edge. However, some hospitals, while they compete for patronage, already cooperate in financial areas such as billing and claims processing. By cooperating on HIE, "they will have to compete on another level -- the quality of clinical care," Dunbrack said.