Are HIEs Sustainable?

By Ken Congdon, editor in chief, Health IT Outcomes

It's no secret that federal legislation such as the HITECH (Health Information Technology for Economic and Clinical Health) Act provides substantial stimulus funds geared to increase the adoption and use of IT in healthcare. However, most of the focus in this area has been placed on the $27 billion in Medicare and Medicaid incentives that are being offered to doctors, hospitals, and clinics that can demonstrate EHR adoption and Meaningful Use. The $548 million in grants available to states to establish HIEs (health information exchanges) have received much less fanfare in the media.

Ideally, HIEs will allow healthcare providers to share patient information with other providers on the network, and actively track a patient's complete medical history, regardless of where a specific treatment or procedure was administered. In theory, these exchanges will help eliminate duplicate tests and adverse drug interactions, lower the cost of managing patient data, and improve the overall quality of patient care in the United States.

The federal government began distributing the State Health Information Exchange Cooperative Agreement Program grant money in March 2010; and, to date, the effort is producing admirable results. Currently, each state is in varying stages of establishing its own HIE, using fundamentally different approaches to building an exchange that meets their own specific needs and requirements. The grant monies issued by the federal government have been the driving force behind why many states embarked on HIE initiatives in the first place, but these grant monies are slated to run out in 2015. While each state was obligated to submit a plan for long-term HIE sustainability in their proposals for grant funds, many are now concerned about how they will keep their HIEs afloat once the grant monies dry up. This concern was palpable in a recent iWatch News survey on the topic.

Alternative HIE Funding Sources

There are several costs associated with establishing and maintaining an HIE. These expenses include, but aren't limited to, software, data migration, and training costs. To date, most states have used federal grants to pay for these expenses, but alternate sources of funding will be necessary once the grants are gone. Most states will be unable to absorb these costs into their annual budgets, given that most have been forced to make significant program cuts in recent years. Therefore, most long-term sustainability models include charging providers and/or payers a subscription- or transaction-based fee for access to the HIE. The problem with this model is the fact that providers and payers aren't yet convinced that HIEs offer enough value for them to foot the bill. In fact, key healthcare industry associations, such as the Association of American Physicians and Surgeons, discourage its members from participating in HIEs, claiming that these exchanges pose significant risk to patient privacy and security. Therefore, communicating and demonstrating the value that HIEs offer providers, payers, and the healthcare community at large will be instrumental in ensuring the funding and long-term success of these statewide networks. For more information on this topic and the iWatch News survey, click here.