A Prescription for Health Information Exchanges

Business Models and Strategy Increasingly Vital

Perhaps lost amid the "repeal and replace Obamacare" debate was an important directive issued earlier this year by the Trump administration that places renewed focus on health information exchanges (HIEs).

The directive, issued to the Office of the National Coordinator for Health IT, “prioritizes interoperability (across state borders) and electronic health record (EHR) usability.” In short, it seeks to make your health records accessible, even when you visit a doctor who’s not your own.

The allure of these digital platforms is in their ability to share important medical information, potentially improving the speed, quality, safety and cost of patient care, mostly within state borders. However, those goals won't be achieved via technology alone, according to a newly published study by Jiban Khuntia, a PhD graduate of the University of Maryland's Robert H. Smith School of Business and now-assistant professor at the University of Colorado Denver, and Smith School professors Sunil Mithas and Ritu Agarwal.

In their paper, "How Service Offerings and Operational Maturity Influence the Viability of Health Information Exchanges," the authors note that the next threshold for the 20-plus-year-old industry to function seamlessly across states "requires HIE managers to prioritize business strategy in their technology- and standards-driven platforms." Financial viability, they argue, is and has been an Achilles' heel to HIEs as these platforms expand and evolve. And the key to financial viability is to pay close attention to the design of the business model.

Who Gets It and Who Doesn't

The authors cite HIEs based in Santa Barbara, California, and Washington, D.C., (circa 2012) as notable failures in financial viability. But they also identified exchanges that have demonstrated financial viability while advancing their "interoperability" and "usability" over time: Indiana Health Information Exchange; Cincinnati, Ohio-based Healthbridge (now part of The Health Collaborative); Delaware Health Information Network; and Colorado Regional Health Information Organization (CORHIO).

The successful HIEs illustrate why, the authors write, it's critical for HIE managers "to think creatively about how to design appropriate revenue structures and choose the right revenue model using both bundles and subscriptions, and how to evolve these over time based on the structure and characteristics of their firms."

The four exemplary HIEs offer a growing portfolio of advanced services from their initial simple service offerings. CORHIO stands out as a newer HIE that has learned from the success and failure of other platforms. CORHIO is forming partnerships with health care organizations in Colorado, and its service offerings and collaborations have helped the stakeholders to realize the value potential of participating in the HIE, the authors say.

The Formula

Successful HIEs typically start by charging for every small service or transaction. Later, they transition to a fee-based model that links services such as clinical messaging and repository services into bundled services, and offer these bundles to hospitals and health systems with fees proportional to business volume. Over time, these HIEs move toward layered monthly subscription-based models, with costs set by the type and volume of service and paid by healthcare providers, physician offices and medical institutions.

"HIE managers need to be proactive in researching customers' needs and considerations when crafting their services portfolio and organizational capabilities," the authors further conclude, "because research suggests that managers' intuition regarding what their customers expect is not always reliable."

Read more: How Service Offerings and Operational Maturity Influence the Viability of Health Information Exchanges is featured in Production and Operations Management.