Wednesday, January 5, 2011

A Healthcare Information Services Provider Business Model

I've written previously about Healthcare Information Exchange Sustainability and the need for Healthcare Information Services Providers (HISPs) to serve as gateways connecting individual EHRs.

How should HISPs be funded and how can we encourage HISP vendors to connect every little guy in the country?

We've started to think about this in Massachusetts.

There are numerous vendors promising HISP services -  Medicity (Aenta), Axolotl (Ingenix), Surescripts, Verizon, and Covisint.

An HIE needs to include at least one common approach to data transport, a routing directory, and a certificate management process that creates a trust fabric.   Existing HISP vendors have heterogeneous approaches to each of these functions.    In the future,  the Direct Project may provide a single approach, but for now HISP vendors will need to be motivated to adhere to State HIE requirements.

An idea that has been embraced by some State HIEs, such as New Hampshire, is to pay HISP vendors a modest fee (under 100K) to support State requirements.   This "connectivity" incentive results in interoperable HISPs, creating a statewide network of networks.

Once a standardized HISP approach is supported by multiple vendors, then individual practices need to be connected.   Some practices will be aggregated into hubs by EHR software vendors as has been done in cities such as North Adams (Massachusetts), projects such as the New York City PCIP project, and physicians organizations such as the Beth Israel Deaconess Physicians Organization.   However, it's not likely to be cost effective for a vendor to connect every isolated practice to a HISP for the $50/month the practice is willing to pay.

The Regional Extension Center program offers $5000 per provider to accelerate EHR adoption.    If State HIE programs were to offer a onetime EHR integration payment to HISP vendors, such as $500 per practice connected, then it is likely vendors would accelerate their efforts to connect "the last mile".

Thus, if State HIE funds covered vendor costs to implement statewide standards and offered a per EHR initial connectivity fee, barriers to startup would be eliminated.   The small amounts clinicians are willing to pay per month would then cover operating expenses so that HISPs could be self sustaining.

As a fallback, in the case that vendors do not find these payments appealing enough, Massachusetts has considered the idea of a public interest HISP - a subsidized service to cover practices without resources, in remote locations, or with special connectivity challenges.

Ideally, market forces would be enough for vendors to connect every payer, provider, and patient in the country.  However, HIEs will only be sustainable when there are sufficient customer connections to create business value.   A catalyst of State HIE funding to accelerate HISP standardization and EHR connectivity is necessary to provide the "activation energy" which will align the cost of providing the service with a price customers are willing to pay.


Anonymous said...

I agree that ideally, market forces would be enough to pay for connecting every user to the HIE. But wouldn't this mean that the cost should fall on the users who financially benefit from the system. I can't think of any significant financial gain for physicians from connecting their EHR to the state HIE, especially in the early years of HIE when a fax machine will do the same thing. But the potential financial gain to insurance companies, medicare, and patients (reduced cost, increased quality of care) will be significant. Shouldn't market forces dictate that they therefore pick up the cost?

George Gaines said...

Interesting thoughts. Would it be possible to spread the cost based on benefit in another way as well. For example, insurance coverage for providers might get reduced by a small amount (kind of like the nonsmoking benefit - we will give you a break on your health insurance)if the providers we integrated. Then both the insurance carriers benefit - lower costs, better healthcare, the providers benefit - help with paying for the infrastructure and IT costs, and the patient benefits by having rapid transfer of medical records when and where needed, etc.