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Are health information exchanges going bankrupt?

by Nancy Ryerson, Staff Writer | July 10, 2013
More hospitals than ever are participating in health information exchanges, but some are questioning whether they're worth the cost once government help runs out, according to a new national survey from the University of Michigan.

HIEs enable unaffiliated health systems to share patient data electronically through different software programs. The 2009 American Recovery and Reinvestment Act dedicated $548 million to help states establish them, and today there are 119 in total, most non-profit entities.

While government funds have helped power the creation of the exchanges, the survey found 74 percent of the exchange programs reported that they're struggling to develop a sustainable business model. And time is running out — the government grants expire in January 2014.
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"All of these models have technical costs, how will the information be sent so it's secure," lead study author, Julia Adler-Milstein, told DOTmed News. "There are hidden costs on making the government pieces of it work."

Patients and insurance companies see a clear benefit, Adler-Milstein said. Insurance companies can avoid paying for repeat exams if the latest doctor has recent test information on file, for example, and patients don't have to detail their health history upon seeing a new provider.

But the survey found that hospitals feel like they receive less of a payback from the exchanges while shouldering all of the costs.

"I think hospitals do feel like they're receiving some value, particularly around having electronic access," said Adler-Milstein. "But they're arguing that payors and patients who are the other beneficiaries of this should be paying too."

Some have suggested that the government should continue supporting HIEs, possibly through a small payroll tax, while others think the free market should determine their fate.

Adler-Milstein said she sees HIEs focusing on elements of their services that are most likely to be profitable without relying on grants, such as test result reporting.

"I think what's encouraging about all of this is that it's just impossible to think about improving the health care system without a robust health information exchange," says Adler-Milstein. "I would take the study as highlighting important challenges but not as a death knell for HIE."

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