Margret Amatayakul

An estimated 130 health information exchange (HIE)organizations exist today-and many of these fledgling HIEs are at risk.

Some HIE organizations have already gone out of business, while new ones continue to form. Although they go by different names-local health information organizations (LHIO), regional health information organizations (RHIO), subnetwork organizations (SNO)-they serve the same purpose: to oversee and govern the exchange of health-related information among disparate stakeholders for the purpose of improving health and health care. Nearly all have formed within the past few years.

Virtually all HIEs have had some external funding support-many in the form of federal planning and/or implementation grants, as well as subsidies, incentives, discounts, and advances from myriad sources. But in fall 2008, many of the federal grants will expire-and the organizations they support will quickly need to become self-sustainable.

What's in Store for HIEs?

How many HIEs will be able to sustain themselves? The answer is anyone's guess, although some suggest the number may be as low as in the single digits. In fact, some within the HIE community have suggested it would have made more sense to fully fund only a very small number of models, find out what works, and then encourage a slower but more sustainable rollout. Others who represent HIEs that did not get much early funding suggest that forcing their HIEs to make a solid business case for existence made the organizations stronger and more likely to succeed. Several states have recently adopted state HIE initiatives to help shore up funding.

It's always easy to second-guess what the best scenario might be for actualizing new concepts. Certainly, there are many issues that put HIEs at risk: Was there a proven business need for HIEs to begin with? Does healthcare IT support even rudimentary interoperability needed for exchange of data? Should-or could-matters of privacy and confidentiality have been worked out before the HIE movement? Was any effort made to study alternative structures for efficient and effective ways to exchange key health information?

But now, much money has been spent, many of these issues have not been fully resolved, and many HIEs have been reluctant to push for a fee structure or wish to incur debt. They are now relying on the "big hospitals" within the community to come through with (more) advances and banking on an ROI that is two or three years out from now, which translates into four or five years from the start of the initiatives.

The CFO's Role

What could CFOs be doing in light of such circumstances? Of course, if your organization is not engaged in an HIE, you are most likely in a position to wait and see. Perhaps an "active observational" position may be best: What lessons can be learned?

Today, it appears that most issues relate to leadership, governance, and business case, not technology or even standards. Are appropriate services being addressed for early ROI? Services that could yield revenue may not be the highest priority areas of most of the stakeholders. For example, in an HIE where most stakeholders are care delivery organizations, exchanging lab results, clinical summaries, and medication lists is typically the highest priority. But because there are other ways to get this information that are free (although they involve more hassle), many are unwilling to pay fees for this information that would generate sustaining revenue for the HIE.

So with some hindsight from watching others, you may be able to propose a structure for a new HIE initiative or for your potential participation in an existing HIE where revenue is more likely. Enhanced financial and administrative transactions, for example, are services some HIEs are finding to be solid revenue generators. Looking beyond the care delivery community to payers, public health, and others who need and want more or better data can also provide new service opportunities for HIEs that enable them to sustain those that are desirable, but difficult to sell.

If you are in an organization engaged in an HIE, instilling solid business practices into what can be a highly charged and emotional process of levying fees or identifying other forms of revenue (i.e., taking on the unpopular position of reversing priorities) is critical. It's been observed that despite the fact that health care consumes a large percentage of the U.S. gross domestic product, it operates very much like a cottage industry. Making business decisions that benefit many is not a routine practice. It often takes an "outsider" to facilitate a group of care delivery organizations to recognize that compromise is acceptable. "Managing polar opposites" has been a task that many HIEs have found difficult. So too, it is difficult to make an investment for the future that impacts a more global economic perspective rather than address short-term needs that only perpetuate a larger economic dilemma in the future.

CFOs engaged in promoting sustainability also need to find ways to overcome the clinical/financial divide. This divide not only pits the medical community against those providing financial oversight, but also pits providers against payers, vendors, public health officials, and consumers (including patients and employers) in an HIE. Identifying the true beneficiary for any HIE service in a transparent and trusting manner is an important exercise that should lead to an effective fee structure and reduced risk to HIEs. The HIE movement appears to have the right vision, but not always the right set of tools to achieve the vision. CFOs with their business perspectives and experience can help overcome much of the divide-and divisiveness.

Margret Amatayakul, RHIA, FHIMSS, is president, Margret\A Consulting, LLC, Schaumburg, Ill. (

Publication Date: Friday, August 01, 2008

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