The State of the HIO

Kathryn Mackenzie, for HealthLeaders Media, September 16, 2008

For the first time, more than half of community-based health information organizations are reporting a positive return on investment, while at the same time struggling to find a sustainable business model, according to the 2008 Fifth Annual Survey of Health Information Exchange at the State and Local Levels.

The findings from 130 initiatives in 48 states continue to make the case that health information technology has the capability to improve patient care while reducing costs, but also points to significant problems that continue to plague start-up HIOs, most notably, and perhaps predictably, interoperability and funding.

The funding dilemma
About 80% of HIOs say that finding the seed money to get started was their greatest challenge. The biggest financial contributors are hospitals and the federal government. About half of operational efforts received up-front funding from hospitals with the other half receiving funding from the federal government. Hospitals also topped the list for providing financial support for continuing operations. Sixty-two percent of operational health information exchange initiatives are receiving funds from hospitals to support ongoing operations, followed by physician practices (38%), the federal government (36%), private payers (29%), state government (26%), and public payers (24%).

It was a non-profit organization that provided the seed money for what is considered a model of success for other HIOs. At its inception, CareSpark faced many of the challenges other HIO start-ups say they are facing now. The Kingsport, TN-based exchange sees about 750,000 patients from five different states, and therefore has to contend with five different state Medicaid programs, five different state health plan systems, and innumerable health information systems. "You could say we were the perfect storm of collaboration and consistency. We realized it is very important that we would have to be able to coordinate and communicate with many others in the country," said Liesa Jenkins, executive director of CareSpark during a briefing held by the Capitol Hill Steering Committee on Telehealth and Healthcare Informatics.

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