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Effective HIE Business Models Remain Elusive
By Elizabeth S. Roop

Sustainability has long been the holy grail of health information exchange (HIE) initiatives. Achieving it requires an effective business model—something that has proven to be fairly elusive as initiatives have matured.

In the past, many HIEs operated under subscription models or generated revenues through transaction fees charged to participants. While those worked in some cases, some question their effectiveness over time and in today’s new HIE environment.

“We just don’t feel that, in our region in particular, they’ll work. Most of our customers are opposed to transaction fees. If we tried to charge them a penny for every time they used the system, it would destroy their trust,” says Thomas Fritz, a National eHealth Collaborative board member and CEO of Inland Northwest Health Service. “To create an infrastructure and say you have to pay to access it makes people very leery about what the whole concept is about. Providers want to see more efficiencies, not another administrative burden.”

Jennifer Covich, CEO of the eHealth Initiative, notes that subscription models have enjoyed past success. However, they may not be the most appropriate approach for new initiatives. Instead, she says, a “utility model” approach might be better.

“Try and think about business models for other types of infrastructure. Who pays for our roads, electricity, and water? We all benefit from those things. We all pay to support them and we rarely think about them. They are basic infrastructure. We need to get to a place where the exchange is viewed as a required infrastructure for quality healthcare,” she says.

The key for today’s HIEs is to develop a business model that allows the initiative to move efficiently from the grants that generally make up start-up funds through bridge funding and into sustainability funding. To do that most effectively, business models must recognize that the benefits from HIEs are widespread and therefore support should not be demanded of just certain stakeholder groups.

In fact, according to Laura Adams, president and CEO of the Rhode Island Quality Institute and chair of the National eHealth Collaborative 2010 board of directors, if current payment systems don’t change, an HIE may actually wind up hurting some providers by chipping away at revenues they generate through multiple tests—duplications that should be eliminated when HIEs are working properly.

She points to Vermont, which passed legislation imposing a fee on all medical claims for use in funding HIT efforts, including HIEs. That model, which was expected to raise $32 million over seven years, was “just genius because it spread costs so evenly and no one is overburdened,” says Adams.

“It’s going extremely well and generating a predictable, tangible, and substantial revenue stream that they can count on,” she adds. “I might even call it bridge funding rather than sustainability in the sense that it does sunset in seven years. But by then, by virtue of having those funds, the community will find it valuable to continue.”

— Elizabeth S. Roop is a Tampa, Fla.-based freelance writer specializing in healthcare and HIT.