A RHIO that works and pays

The big challenge facing regional health information organizations is financial sustainability, but the Indiana Health Information Exchange (IHIE) is not only surviving monetarily, it’s thriving. This RHIO is doing so well, in fact, that it recently graduated from a business incubator run by Indiana University and moved into a large commercial space that will allow it to grow from 18 to 46 employees by the end of the year.“We’re extremely pleased with how things are going,” said Dr. Marc Overhage, president and chief executive officer of IHIE. “Not only are we covering all of our expenses, but we are generating enough to invest in growth.”Launched in 2004, IHIE runs one of the industry’s most successful clinical messaging systems. It transmits, on average, 1 million messages per month to 4,000 physicians and saves an estimated $6 million per year by eliminating duplicate tests and other administrative tasks. IHIE recently launched a new quality reporting system named Quality Health First. And, Overhage said, it is planning to deploy 20 new services, including medication reconciliation, diabetes management, cholesterol management, breast cancer screening and colorectal screening.IHIE has eight customers, mostly large urban hospitals and hospital systems. Those include St. Vincent’s Health, which runs 17 hospitals, and Community Health Network, which has four hospitals and a laboratory.So what’s the secret to its success? Overhage said there’s “no list of magic bullets that you can put up on a PowerPoint slide.” But he added that by taking a deliberate, patient, businesslike approach to the effort, IHIE has been able to successfully develop solid, collaborative partnerships; offer an easy-to-use, valuable service that customers are willing to buy and use and keep a tight rein on costs.“Even though we’re a not-for-profit, tax-exempt organization, we run it like a business,” Overhage said. That means, for example, that expenses for each product line are tabulated separately. “We know exactly what it’s costing us to deliver that service and we’re able to describe to our participants exactly what goes into that figure. We don’t just mush it all up and assume it will all work out and somebody will give us more money.”Another critical factor for success happened when IHIE officials decided against “trying to boil the ocean” and instead opted to build the business incrementally. Initially, IHIE only offered a clinical messaging service. “You can build it in an infinite period of time, it doesn’t cost a jillion dollars to create and it brings value in a fairly short timeframe, so people are willing to write checks for it,” Overhage said.Starting with a simple service also allowed IHIE to keep the barriers to entry low for physician practices and hospitals, in terms of technology, process and policy. Even in a sophisticated hospital, it usually takes just one day for an information technology staffer to complete the initial setup integration of IHIE’s clinical messaging system and begin participation.By building incrementally, Overhage added, there’s also not as much pressure to close deals quickly. “If you do the big bang thing and you’ve got to generate $1 million in revenue, Day One, then you’re on that fast track and you’ve got to go out and beat on people,” he said. “We have a lot more leisure to let people grow on the idea and complete the sale over time.”Finally, trust and patient persistence are critical to selling RHIO services to busy, stressed health care providers, who, Overhage said, “need extra time to process what you’re saying and think about and work through the idea.”The California Regional Health Information Organization (CalRHIO) has selected the team of Medicity and Perot Systems to build a statewide health information exchange service. The nonprofit organization’s leaders announced that the contracting team’s first step will be to help CalRHIO find $300 million in private financing for the start of the exchange, including a backbone network, marketing and CalRHIO’s operations. The exchange will operate as a utility, offering services to health care providers, patients, government agencies and other RHIOs in California. The network can be used for local data exchanges or linking existing exchanges with one another. User fees will support the exchange, but no details about the fees have been made public. However, CalRHIO officials said the savings expected as a result of having better information to care for patients will be many times greater than the cost of the exchange’s services. Medicity, based in Salt Lake City, specializes in Web-based integration of health records. Perot Systems, based in Plano, Texas, is an IT services company that does considerable business with the government. Dr. Molly Coye, one of CalRHIO’s founders, said in a statement that the Medicity/Perot Systems team offered not only proven technology but also an innovative approach to financing the project, an approach that appears able to sustain the exchange in the long term. CalRHIO issued its request for proposals in December 2006. The following month, it announced that eight companies were in the running for the contract. In addition to Medicity, they were Accenture; Covisint; Computer Sciences Corp.; IBM, partnering with Axolotl; McKesson; Sun Microsystems; and Wellogic. The announcement of the contract award stressed the flexibility of the future exchange, including its expected ability to connect a variety of existing e-health records systems and other health IT applications. It also emphasized that the information would be transmitted securely.