HIEs seeking answers to sustainability

Barely 25 percent of HIEs said they're able to cover operating costs with revenue from participating providers

More providers than ever are participating in health information exchanges, at the same time that a majority of HIE organizations are struggling to find sustainable business models, a new study has found.

About 30 percent of hospitals and 10 percent of ambulatory practices are now participating in one of the 119 operational HIEs across the country, while 74 percent of HIEs surveyed report long-term funding challenges, a group of researchers led by the University of Michigan’s Julia Adler-Milstein found in a study published in Health Affairs.

[See also: Sustainability threatens HIEs even as their numbers increase]

Some $548 million in the HITECH Act was devoted to offering startup funding to HIEs, which have filled gaps in EHR interoperability. But with that money set to run out by the end of the year, "the organizations haven't figured out how to fund themselves," Adler-Millstein said in a media release.

Grants, mostly stemming from HITECH's state cooperative agreements, and contracts are the largest source of funding for 52 percent of the nation's operational HIEs Adler-Millstein and her colleagues found in a national survey.

But less than 25 percent of HIEs said they're able to cover operating costs with revenue from participating providers and health organizations. And 74 percent of some 172 HIEs – both operational HIEs and those in the planning stages – said that development of a sustainable business model was either a "moderate or substantial" barrier.

"The fact that three-quarters of efforts cite developing a sustainable business model as a major barrier is a warning to policy makers that the growth in health information exchange will likely falter unless these efforts become self-sustaining or there is a long-term public commitment to their financing," wrote Adler-Millstein, along with David Bates, chief of internal medicine at Brigham and Women's Hospital, and Ashish Jha, a Harvard health policy professor.

Although, that finding "is not a surprise," they said. In part, the viability struggle is "because payers participate in fewer than half of the efforts and pay to participate in an even smaller proportion of them." That, "despite the fact that payers are generally seen as the primary beneficiary of such exchanges, because sharing health information could reduce the number of redundant tests and procedures."

Providers may be paying subscription or user fees in HIEs, but they aren't necessarily – and probably aren't – benefiting financially. "The healthcare providers are not willing to pay for the service at the level needed. They don't see enough value, and that's because much of it doesn't accrue to them," Adler-Millstein said. "It goes to patients and to health insurance companies. The central challenge is that the incentives and the business model are not aligned yet for this to really work."

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