The road to sustainability for HIEs

In this world of healthcare turmoil, there are two concepts that are here to stay: Care Coordination and Patient Engagement. These phrases are the hallmarks of a bunch of different initiatives including 2010’s Affordable Care Act with its Accountable Care Organization (ACO) rule, the NCQA’s Patient-Centered Medical Home and various Physician Group Incentive Programs advanced by various insurance companies. Certainly the Department of Health & Human Services is on board with its recent “Pledge” asking providers and others to commit to helping patients improve health through technology. While politicians may yell and scream about the constitutionality of mandated insurance coverage, few will argue against the intuitive value that comes from improving care coordination and engaging and empowering families to improve health and lower cost.

2009’s HITECH legislation with its incentives to promote healthcare IT that meets Meaningful Use standards is just the means to the end. That being the case, where are we on the road to this bright future? It’s easy to pontificate using glittering generalities, but when it comes to specifics, it’s hard to gauge. One easy metric might be the number of hospitals and physicians that have qualified for the first stage of funding under Meaningful Use, but all that means is that the providers can check the box—“Yes, we meet the letter of the requirement.” It says little about the intent of the technology or the larger progress towards a change in the way healthcare is delivered.

We think an interesting possible metric might be the number and percentage of Health Information Exchanges that either have achieved or see the way to achieve financial stability. More than any other type of organization, Care Coordination is at the core of the reason for an HIE to exist. On the other hand, it is not clear what role Patient Engagement plays from the HIE perspective. So we’ve been asking questions, trying to learn more about sustainability for HIEs. We’re looking for patterns in the sustainability model to better understand the value chain around Care Coordination and Patient Engagement.

There are a number of good studies and reports in this area, all of which reach pretty much the same conclusions. One good study, “A Survey of Health Information Exchange Organizations in the United States: Implications for Meaningful Use” by Julia Adler-Milstein, BA; David W. Bates, MD, MSc; and Ashish K. Jha, MD, MPH, was published in the Annals of Internal Medicine, May, 2011. The survey considered 197 potential HIEs (also called “RHIOs” or “Regional Health Information Exchanges”) of whom 75 responded and were operational as of December 31, 2009. According to the report, “Overall, 50 of 75 RHIOs (67%) did not meet the criteria for financial viability.” The authors concluded, “These findings call into question whether RHIOs in their current form can be self-sustaining and effective in helping U.S. physicians and hospitals engage in robust HIE to improve the quality and efficiency of care.”

Yikes. If we are looking to sustainability of HIEs as a larger measure for progress towards Care Coordination and, possibly, Patient Engagement, this ain’t a very good sign.

On the other hand, although published in May, 2011, the study was conducted in the first quarter of 2010—before the passage of the Affordable Care Act with its express focus on Care Coordination and Patient Engagement, and it was before the still pending shared savings model was announced for Accountable Care Organizations. Perhaps even more important, it was before employers received their steep increases in health premium renewals that really began in late 2010 and continued in 2011.

So we’ve been wondering: What, if anything, has changed in the last year and a half? Today, how many HIEs are operational? Is it up from last year’s 75? (We expect so.) If only 25 HIEs met the criteria for financial viability in early 2010, today how many either meet those criteria or see a vision to do so? (We don’t know.) And, most important, what are the elements of sustainability in light of the Affordable Care Act and the rapidly rising costs of health insurance? (We think we know.)

With luck, (now) Dr. Adler-Milstein, one of the authors of the above-mentioned study, who was at Harvard when the study was conducted, is now an Associate Professor at the School of Information at the University of Michigan, a few blocks from our office. This past week, I stopped by Dr. Adler-Milstein’s office to chat about these questions. (This was an informal chat, not a formal interview. These comments are paraphrased from that discussion.)

Dr. Adler-Milstein reiterated her concern whether HIEs can achieve sustainability in their current form, but allowed that they have not updated the study to reflect the possible impact of events since the study period in early 2010. As we talked about the value propositions for HIEs, she noted that most HIEs are still in the early stages of connecting the providers in their communities and are not in a position to clearly express any business model that will result in sustainability. As we talked about the value propositions for HIEs, she noted that for the HIEs with which she spoke, the value proposition was focused on efficiencies to improve communication of personal health information (lab results, medications, problem lists, etc.) between providers. We agreed that it appeared to be difficult to achieve sustainability based solely on a model of improved communication between providers.

If not simply improved communication, then what value proposition will lead to sustainability for HIEs?

At the highest level, ROI calculations and value propositions always boil down to two things:

1) How much money will we save?
2) How much new revenue can we earn?

Ultimately, these are two sides of the same coin. For the proposed Accountable Care Organizations, this appears to be fairly easy. ACOs will be required to improve Care Coordination and Patient Engagement, therefore, to the extent that an HIE is a participant in an ACO, it will be compensated by receiving a part of the savings paid to the ACO. That constitutes cost savings for Medicare and new revenue for the HIE.

But what about HIEs that are not part of ACOs? What value propositions will lead to their sustainability model besides improved communication among providers?

As we’ve talked to HIE executives and to other industry executives, we see a new trend emerging, focused on giving value to employers and insurers through Care Coordination and Patient Engagement to improve health and lower cost.

One of our favorite sources in these matters is Earle Rugg, CEO of Rural Health IT, one of the premier consultancies in this area. Earle’s answer was firm: “You can only get so much from improving communication among providers—and today that’s pretty slim. How much can you save from the perspective of any individual hospital or physician under the present or proposed payment models? Not much. Sustainability has to come from someplace else. It’s not going to come from consumers. They simply aren’t going to pay. So, it has to come from employers and insurers. They are the ones who take the hit for unnecessary lab tests, avoidable hospitalizations, and lost days at work. They are the ones who are willing to give up a part of their savings thereby creating a new revenue stream for HIEs. Physicians, clinics & hospitals are willing to pay for HIE  provided value & applications, especially if they can pass that along to payers/employers and/or patients/consumers…ultimately consumer stickiness and connecting consumers in new ways to improve their health & wellness will add to HIE sustainability. ”

I raised this idea with Dr. Adler-Milstein who said she had not encountered any HIEs that included value to the employers and insurers in their sustainability plan. When I told Earle about her comment, he was quick to say that she is right—as far as where the market has been. “But there simply is no choice today—and payers are starting to understand that. Unless an HIE figures out how to give value to the employers and insurers, unless they convince the payers that it is in their interest to financially support the HIE, there is no sustainability model. It is as simple as that. Payers are key stakeholders, just as Medicare and Medicaid are driving forces for the ACO rule, in every HIE with which we work.”

I tested this idea by speaking with Executive Directors from a few of the HIEs with which we work. Since our business is Patient Engagement, this isn’t a representative sample. If we’re talking to them, they are already interested in Patient Engagement. However, every HIE that is considering our Patient Engagement systems is directly focused on the payer as a critical stakeholder. While the financial models vary, the concept is the same: The HIE is compensated for providing not only communication tools between providers but also for engaging consumers on behalf of all providers. This may include health and wellness tools that go far beyond the clinical Patient Portals and Personal Health Records. As one executive director said, “I have the insurance companies and employers at the table. Now I have to move quickly to offer a community-wide Patient Portal before each of my individual members offers its own tethered patient portal. Once they do that, it will be hell to get them to change to our portal, and without a single portal, we’ll never achieve the levels of Care Coordination and Patient Engagement that our stakeholders demand.”

Of course, these are just anecdotes from biased prospects. That doesn’t demonstrate much.

Fortunately, this fall our company has been selected as a featured company in Professor Brophy’s Entrepreneurship class at the Ross Business School of the University of Michigan. That means we have 5 students conducting market research for us this fall. You can guess what we’ve asked them to research. Where the number of declared HIEs in early 2010 was less than 200, today the eHealth Initiative lists about 250, and another 30 to 50 (with some overlap) might appear in the form of ACOs. We do not intend to conduct a survey of all HIEs, but we do intend to conduct fairly detailed interviews with at least 25 of the most successful HIEs. Our questions are simple:

1) Do you see a path to sustainability for your HIE? What is it?
2) What are the key value propositions that lead to sustainability? Who are the key stakeholders?
3) What role does the payer have in your sustainability model?
4) What role, if any, does patient engagement play in your value proposition?

This should be very enlightening work. We don’t expect a unanimous or final insight into this, but we should get a nice snap-shot of where we are today on this long and important road.

Stay tuned.

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