4 steps healthcare CFOs can take to improve interoperability

By promoting greater interoperability among information systems within and outside of their organizations, healthcare finance leaders can help reap the benefits of the organizations’ technology investments.

December 7, 2023 3:51 pm

Achieving information interoperability has long been touted as a solution to challenges that have plagued the healthcare industry for decades. For example, a health system that operates multiple electronic health records (EHRs) and systems across its facilities, hospitals and practices must undergo an extremely time-consuming and complicated process in gathering comprehensive patient records (e.g., by patient request or to share with a specialist). Errors in such a process are unavoidable, and clinical staff bear the burden of manually sifting through data from various sources to correct them. The ability to integrate EHRs and automate data compilation through interoperability clearly is a game changer in such scenarios. (See the sidebar at the end of this article for a discussion of the advantages of interoperability from a business standpoint.)

interoperability is needed to save time and money, improve accuracy and ensure compliance across multiple processes, including:

  • Patient care coordination
  • Quality reporting
  • Release of information requests
  • Prior authorization
  • Appointment scheduling
  • Virtual care

Health systems and health plans have made great strides in interoperability over the past few years, thanks in part to new standards that have sped adoption across the industry. But much work has yet to be done, and finance leaders in both types of organizations have a critical role to play in promoting interoperability — and in ensuring health it ultimately fulfills its promise of helping to reduce costs and improve quality.

How finance leaders can improve interoperability

With their focus on analysis and measurement, CFOs and other finance leaders have an important and unique role to play in promoting interoperability in provider and payer organizations. Here are four key steps.

1 Create a cross-functional interoperability taskforce with the CIO. This taskforce can help define the organization’s interoperability strategy, prioritize initiatives and identify the capital investments needed to advance interoperability. Operational units should be included because interoperability is about more than just getting technology systems to work together; it also is about people working together in business processes that are sufficiently integrated to allow for improved efficiencies, both in the processes and in use of the technology.

This taskforce can also help determine an organization’s glidepath for the trusted exchange Framework and Common Agreement (TEFCA), released by the Office of the national Coordinator for Health information technology (ONC) in early 2022. ONC created TEFCA to provide a framework to drive interoperability and, thereby, improve care coordination and drive better outcomes.a Several leading organizations, including eHealth exchange and epic, have applied as qualified health information networks (QHins) and have been actively testing in preparation for the anticipated go live of TEFCA.

Organizations that choose to participate will have better access to health information across the enterprise, which can help improve quality and lower costs.

The task force also can combine the insight and expertise needed to assess their organization’s readiness for participating in TEFCA and to better understand the use cases that would meet the organization’s specific needs. For example, participating in TEFCA may give a provider-led accountable care organization the framework it needs to share documentation for reimbursement with a health plan.

2 Get a baseline of key processes. CFOs can guide other finance and clinical leaders in gathering baseline measurements on key processes to assess the impact of interoperability in their organizations over time.

With prior authorizations (PAs), for example, leaders can identify which items require PAs, how automation can decrease the turnaround times to gather the medical documentation and submit a PA request, and how long it takes to receive a determination from the payer. The leaders then can compare their organization’s performance against benchmarks from groups such as the American Medical Association and the American Hospital Association. In this way, they can track how interoperability affects their performance over time.

Other administrative and clinical processes that providers can measure include care transitions and quality reporting.

For payers, getting a baseline of processes such as PAs and the times for approvals, denials and determinations after pending or appealing requests is a good starting point.

3 Secure financial incentives and human resources to promote interoperability. Payer incentives for contract providers, along with government incentives through the Medicare Promoting interoperability Program, can help providers as they move toward eHr integration.b

To support it workforce development in their healthcare service area, the senior finance executive should consider engaging the organization’s technical or subject matter experts in this effort. Possible avenues for these experts include the following: •

  • Participating in a program that provides incentives for them to make referrals
  • Becoming active in industry standards accelerators such as the HL7 Da Vinci Project or online user or developer groups
  • Collaborating with universities or networking groups

CFOs also could offer insights on desired competencies and curriculum design, or they could sponsor networking events to ensure the future workforce can meet the needs of their organizations.

4 Create a culture of continuous improvement. Often an upgrade that enhances interoperability sheds light on other opportunities to improve interactions between providers, payers, patients and purchasing groups in the healthcare system.

In particular, CFOs should collaborate with operations and compliance leaders to identify problem areas and propose ways to reduce waste through interoperability. For example, sharing of lab orders and results can reduce waste associated with the ordering of duplicative lab tests that can occur because of information gaps.

Drivers of ROI from improved interoperability

ROI from interoperability improvements can be calculated in numerous ways. examples are described in a report issued in 2020 by Deloitte, which provides a comprehensive overview of interoperability in healthcare and its financial benefits.c Deloitte suggests improved interoperability can enable providers and health plans to realize cost savings and revenue gains in the following ways:

  • Improving performance with value-based care
  • Enhancing operational efficiencies
  • Increasing patient volume
  • Expanding health plan membership

The report also provides formulas to estimate ROI outcomes in each area.

Fast forward to a more interoperable world

Payer and provider organizations have made multimillion dollar investments in technology only to see it become obsolete in a few years because it lacks effective interfaces, software or workflow integration. But here’s some good news: As interoperability improves throughout the healthcare industry, this obsolescence trend will abate.

In the next few years, interoperability will deliver additional ROI, and with continued adoption, the ROiIwill expand further. But it will take more than standards like FHIR and frameworks like TEFCA to make this a reality.

Payer and provider organizations also require strong financial leadership and collaboration between finance and operational leaders to be able to realize the full benefits of their investments in interoperability.


a. “Trusted Exchange Framework and Common Agreement (TEFCA) Network,” ONC, Content last reviewed Nov. 21, 2023.
b., “Advancing interoperability and improving prior authorization processes proposed rule CMS-0057-P: Fact Sheet,” Dec. 6, 2022.
c. Deloitte, Radical interoperability in health care: Measuring the impacts on care, cost, and growth, 2020.

What is interoperability and how is it applied in healthcare?

According to the Health Information and Management Systems Society (HIMSS), interoperability is the ability of different information systems, devices and applications to work together in a coordinated fashion.a By working across organizational and geographical boundaries, interoperable technology can help provide information in a timely and seamless way, thereby promoting better population health.

Interoperability is accomplished through the following means:

  • Health information exchange (i.e., the ability to share clinical data among multiple different health information systems
  • Application programming interfaces (APIs), which allow software applications to work together
  • Standards that allow health organizations to share data accurately and securely


a. HIMSS, “Interoperability in healthcare,” page accessed Nov. 28, 2023

The business case for interoperability

Until recently, the costs associated with advancing healthcare information interoperability have eclipsed the benefits for hospitals and health plans alike. But that is starting to change. Following are just five examples of ways that interoperability can help providers and payers meet their financial and strategic goals.

1 Supporting price transparency. Price transparency hinges on the ability to understand the true cost of care at the procedure level and for an episode of care, which requires more coordinated data sharing between payers and providers. Software developers are using the Health Level 7 Fast Healthcare Interoperability Resource (HL7 FHIR) standard and application programming interface (API) to make seamless data sharing between payers and providers possible.a Specifically, FHIR APIs are vendor-agnostic and allow health information to be exchanged more easily at the data level. CMS promotes the use of FHIR APIs in many of its latest regulations promoting interoperability between payers and providers.

2 Speeding up prior authorizations (PAs) and reducing administrative waste. The 2022 CAQH Index estimates that the medical industry could save $22.3 billion each year by replacing manual processes with electronic transactions, such as eligibility and benefit verification and PAs.b

Transitioning from manual to electronic transactions alone does not equate with interoperability, nor has it much reduced either the burden and inefficiencies providers and payers face or the delays patients experience. But greater interoperability enables both providers and payers to work more efficiently in managing and delivering high-quality care, including in more complex patient cases requiring medical review from a clinician before being submitted for payment.

CMS’s Advancing Interoperability and Improving Prior Authorizations proposed rule would require payers to use standard FHIR APIs to automate the PA process between providers and payers.c It would also encourage providers to adopt electronic PA processes by adding a performance measure for clinicians under the Merit-based Incentive Payment System, as well as for hospitals under the Medicare Promoting Interoperability Program. These measures would track how many PAs are used with FHIR APIs as well as the number of approvals or denials.

The goal of such regulations is to reduce providers’ need to fax requests or visit payer portals, while making it less likely that payers need to make multiple follow-ups to providers to request additional documentation. From a patient perspective, faster PAs should reduce the likelihood that individuals abandon their care plan and improve member satisfaction.

Interoperability may also help reduce inefficiencies in other areas, such as care transitions. Having efficient ways to ensure sufficient information accompanies patients as they move from one setting to another with new care teams is essential to ensuring care is both effective and safe.

3 Optimizing performance in value-based care agreements. Provider organizations have spent considerable time and money transforming their delivery models to better coordinate care and manage population health so they can meet clinical and financial performance targets. But without interoperability, much of that effort may be wasted. When health IT systems aren’t optimized to share data, medical errors are more likely because providers lack access to the entire patient record, which includes the patients’ current medications, allergies and medical history. Duplicate tests can become a problem when existing results are not shared, thereby increasing utilization and costs. It also becomes more difficult to identify at-risk populations, which is especially important in aiding payers and providers in their efforts to reduce health disparities.

Better interoperability through such a framework can improve performance under value-base contracts by automating labor-intensive quality reporting for more timely and accurate payments.d

4 Avoiding penalties for information blocking. Information blocking occurs when providers unfairly restrict patient access to electronic health information, and it carries a hefty fine: up to $1 million in civil penalties.e Interoperability can help reduce the risk of these fines by improving information sharing with patients.

5 Improving coordination of benefits (COB). Payers’ COB processes may lag if they cannot determine payment responsibilities for dual eligibles or other beneficiaries who are covered by more than one plan. Improved interoperability can greatly simplify this determination.


a. ONC, “What is FHIR®?” Fact sheet, August 2019.
b. CAQH Explorations, 2022 CAQH index. A decade of progress, CAQH, 2023.
c., “Advancing interoperability and improving prior authorization processes proposed rule CMS-0057-P: Fact Sheet,” Dec. 6, 2022.
d., “Trusted Exchange Framework and Common Agreement (TEFCA) Network,” ONC, Content last reviewed Nov. 21, 2023.
e. “Information Blocking,” U.S. Department of Health and Human Services Office of Inspector General, Sep. 14, 2023.


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