Unsustainable and unremarkable, state HIEs flounder to stay relevant

In 2009, over a half billion dollars was allocated from the HITECH Act to stand up state-level Health Information Exchanges (HIEs). Too much money, too early, in a market ill-prepared to effectively launch a robust HIE left us with a chaotic hodge-podge of models across the country.

The Gold Rush

The passage of the HITECH Act dumped billions of dollars into the health IT market to encourage the adoption and use of EHRs by providers; EHR vendors wasted no time in tapping this source of funding. EHR adoption was a success, soaring from roughly 15% adoption among acute care facilities to close to 100% today. Adoption among ambulatory practices has also been impressive, growing from about seven percent adoption in ambulatory practices in 2009 to nearly 90% today.

Likewise, the $500M+ allocated towards the build-out of state HIEs created its own gold rush among HIE vendors. However, success (adoption and use) of these HIEs is far more checkered. It’s not as though HIE vendors and their customers didn’t try to be successful. There were, however, a number of looming issues with the creation of these first generation HIEs, primary among them:

The funding was ahead of the need. Without the EHR data to move – EHRs were still rare – HIEs had little, if any, utility for distributing a patient’s longitudinal record. About the only thing HIEs could do was manage lab referrals and results distribution – a far cry from distributing a comprehensive longitudinal patient record for care coordination.

State HIEs were not run as a business. Nearly all state HIEs had no sustainability model, and few sought to understand what the market was willing to pay for and how much. This further hindered adoption and use of state based HIEs.

Most large health systems had their own enterprise HIEs. Thus, they saw little need to participate in a statewide HIE, coupled with the fact they were loathed to share their patient data with competing health systems. This last point holds true through today as many state HIEs we recently spoke with stated it was very difficult to get large health system buy-in and support. Some HIEs have simply given up on them, instead focusing their HIE services offering towards independent, ambulatory practices.

Successful HIEs: Few and Far Between

Very few state HIEs have crossed the chasm to become profitable, self-sustaining entities. Most of these HIEs are managing to keep the lights on, but their long-term prospects are dim. In some instances, states have even gone so far as to relinquish the management of their state HIE to another state (MIHIN running day to day management of Connecticut’s HIE or combined with a neighboring state (Arizona and Colorado HIEs). In both instances, the motivating factor was the desire to lower operating costs via shared resources.

What was most surprising in my cursory research on this market was simply how little has changed with regard to state HIEs operating services model and the lack of pricing uniformity across the landscape of state HIEs. These HIEs are living in the past, delivering the same services e.g., patient health information, quality reporting (for MIPS, MACRA and value based care), lab referrals, results distribution, and ADT feeds to ambulatory practices.

While modest fees are often charged to providers for these services, they are insufficient to fund all HIE costs. Most HIEs use a variety of funding sources including their state government, Medicaid funding and charging fees to payers to subsidize HIE services for ambulatory providers. For many HIEs, payers are the primary funding source today.

However, payers are beginning to question the utility of supporting a multitude of HIEs, each unique to the state they serve. This will become even more prevalent among payers as they seek out third party vendors that have a national footprint for collecting and distributing health information. These third parties, such as Point Click Care or Patient Ping (now Bamboo Health) for ADT feeds, are able to provide such services across most, if not all states, without the added burden of one-off negotiations with individual state HIEs.

There is also the issue of the new TEFCA rules to allow unfettered access to clinical records via FHIR APIs. This has created a number of new companies seeking to leverage these APIs and provide health information to others. A good example of this is Particle Health.

Lastly, there is the issue of provider-payer convergence wherein providers or payers are using new solutions to share patient data directly in support of eligibility, prior authorizations and claims submittal. Moxe is one company that has been working closely with payers and providers. The second and more formidable service is Epic’s Payer Platform that has now signed on nearly every large national payer in the country as well as a number of local Blues plans.

Tapping into State Public Health Needs

With an HIE’s primary source of funding, payers, likely to dwindle in the coming years, how will state HIEs survive? Frankly, many will simply fold or as in the case of Connecticut HIE, the HIE will be managed by a third party (another HIE). Those that do survive will need to develop new business models and sources of funding.

The aforementioned MiHIN is an example of a state HIE that first worked to consolidate the various regional HIEs in Michigan. MiHIN has now established a separate service arm, Velatura, that provides various shared resource services to other state HIEs. In some instances – Connecticut HIE – Velatura takes over complete management of the HIE. The state of Nevada’s HIE is taking a similar approach, albeit servicing state HIEs in the west.

What MiHIN has done is a novel model to develop new sources of revenue to be sustainable while concurrently still serving the needs of Michigan. But this model is not easily replicated, and the number of potential clients is limited.

Becoming the Interstitial Fluid for State Health Reporting

The best opportunity for state HIEs is in serving the public health needs of the state. Within any state, there are a multitude of public health reporting needs that a state HIE can fulfill: supporting state Medicaid programs, addressing health equity, public health reporting, and more.

However, today in most states such reporting is addressed through a wide array of state entities with little coordination. This creates an opportunity, if it can overcome the political roadblocks, to be that interstitial fluid serving the state’s health reporting requirements. 

For example, the northern California HIE, Manifest MEDEX, has been quite successful in tapping state funding. This HIE is now playing a pivotal role in the state’s Medi-Cal program. This HIE also won a lucrative contract with the state’s public health reporting agency for tracking COVID-19 throughout the state. This was a unique win for Manifest MEDEX, as they beat out two competing bidders (large, nationwide consulting firms) for this contract win.

In the Public Service

For years, the issue of creating sustainability models for public utilities such as a state HIE have been challenging. While I am a firm believer that capitalism has its place in society, I am less convinced that it works in the capacity of addressing public health needs, which a state HIE can and should address.

Going forward, it would be wise of a state to consider their HIE as a critical public need/service and provide the majority of financial support to maintain the HIE. In such a scenario, the state HIE acts as a critical contributor across a number of state entities, from Medicaid to public health. This will, however, require some excellent politicking to take over and manage these data resources if other state entities have responsibility.