Overview of Stimulus Bill and its potential impact on the RHIO & HIE markets

1. Stimulus Bill & Health
Exchange Market
Impact & Analysis
By: John Moore
John@chilmarkresearch.com
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 1
expressed permission

2. Agenda
Macro Market
E.g., Stimulus, Provider Market, etc.
Current Exchange Market
Status, Trends
Future Directions
Stimulus Impact & Market Direction
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 2
expressed permission

3. Defining HIE & RHIO per NAHIT
Health Information Exchange
“The electronic movement of health-related information
among organizations according to nationally recognized
standards.”
Internal governance => Hospitals, IDNs, etc
Regional Health Information Organization
An organization that oversees and governs the exchange
of health-related information among organizations
according to nationally recognized standards.
External governance => Govt., Payers, Foundations,
etc.
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 3
expressed permission

4. Macro Market Trends: ARRA Legislation
HITECH Act
$300M Directly Targeting “Exchanges”
Discretion of ONC director
Administered by States
Will target RHIOs
Dwarfs Previous Federal Investments
Other Potential Exchange Funding Sources:
$1.5B Health Resources & Services Admin
$85M Bureau of Indian Affairs
$1.1B NIH & AHRQ
Comparative Effectiveness projects may fund
Exchanges (HIEs) at hospitals & IDNs
Other Stimulus Funding for Exchanges???
$4B+ Broadband, SSA?
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 4
expressed permission

5. Implications of ARRA Legislation (cont.)
“Meaningful Use of Certified EHR”
Information Sharing for Care Coordination
Quality Measures Reported
eRx
Implications for HIE & RHIOs?
Extension of “Certified” to Include RHIO/HIE
Technology?
CCHIT ‘09 Certification Initiative
Research & Extension Centers
Focus on Interoperability
Core premise of Exchanges
New HIPAA Guidelines
Consumer Consent & Breach Notification
State Attorney Generals Can Sue
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 5
expressed permission

6. Implications of ARRA Legislation (cont.)
Funding to States in Two Categories
Planning Grants
Less restrictive
Bring together stakeholders to lay out framework,
governance, etc.
Forecast minority funding from ONC
Implementation Grants (“Shovel Ready”) Must Have…
Operating governance structure
Detailed technical plan
Defined clinical use cases
Statewide privacy & security policies in place
States Required to Provide Matching Funds After 2011
Rush to Get in Line
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 6
expressed permission

7. ARRA Requires HIT Standardization
Secretary Must Adopt Standards for NHIN
Deadline: Dec. 31, 2009
All Federal Agencies Must Follow Standards
States will likely follow suit
Voluntary for Private Entities (HIEs) But:
Agencies shall require by contract or agreement the
use of standards in new or upgraded systems
Standards tied into ability to receive Medicare and
Medicaid incentives
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 7
expressed permission

8. Looking Globally
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 8
expressed permission

9. United States vs. Rest of World cont.
International Initiatives
Based on Top-down Model
Driven by National Entity
Have a Clear Command Structure
High-level Advisors
Are Well-funded
Long sales & delivery cycles
Consistent within Country, not World
Cultures, control, engagement
Broad Adoption Obtainable
National Health Systems drive
adoption
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 9
expressed permission

10. United States vs. Rest of World
US HIE/RHIO Initiatives are…
Bottoms-up Model
Local/Regional
Consensus Based
Significant Legal/Security Issues to Negotiate
Funding a Challenge
Little Consistency
Trial and Error
Broad Adoption Elusive
Value for who?
Exchange Activities in All 50 States
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 10
expressed permission

11. Status of State Initiatives Varies Widely
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 11
expressed permission

12. ~200 RHIOs/HIEs in US Today
eHI and HIMSS Significantly Different
HIMSS*: Extremely Broad Definition = 475 Exchanges
102 proposed
eHI*: Tighter, More Govt. Focused = 130 Exchanges
75% Still in Formative Stages
Majority Struggle with Business Model
Many Failed Attempts
Some barely surviving
HIEs Tend to Perform Better
Business Case is Clear
Value proposition in place
*HIMSS: Health Information Mgmt Systems Society
*eHI: eHealth Initiative
RHIOs & HIEs are Distinctly Different
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 12
expressed permission

13. RHIO Market -> Government Sponsored
Driven by Government
States: Keen Interest in
RHIOs
eHI Adoption #1 in
2007
Most have something
happening in their State
Localized
More Failures than
Successes
Business model
Define Value Prop.
Leadership
Governance
Improve Quality, Safety & Lower Costs
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 13
expressed permission

14. Objectives Drive Attributes - (RHIOs)
RHIOs Focus on Public Health
Quality reporting
Need for metrics/analytics
Patient Safety
Minimize ADEs
Lower Costs
Care Coordination
Disease Mgmt
Data aggregation & distribution
Minimize duplicate testing
Alerts
Today, Strong Focus on eRx
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 14
expressed permission

15. Sustainability Remains a Challenge
Over 80% Report Very to Moderate Difficulty
in Creating Self-Sustaining Model
Financial Models in State of Flux
Subscription or Transaction Fees Dominant
Often insufficient
Migration to Value-added Services
Produce reports (eg Quality)
Coordinate financial incentives
EMR implementation guidance
EMR data uploads
Workflow analysis
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 15
expressed permission

16. HIE Market Driven by Hospitals & IDNS
More Difficult to Measure
Number of HIEs
Wide Range of Deployments
Wide range of Models
Some in HIMSS numbers are little
more than a portal
A Portal is not an Exchange
Most Large IDNs Have Something
Live or “In the Works”
Increasing Interest in Highly
Competitive Markets
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 16
expressed permission

17. Objectives Drives Attributes (HIEs)
HIEs Focus on Erecting Competitive Barriers
Strengthen & Retain Relationships
Affiliated Practices & Physicians
Ease data access
Push via publish/subscribe
Drive Revenue
Facilitate transactions
Keep referrals, orders, etc. in network
Lower Costs
Distribution of results
Tap P4P Initiatives
Analytics for reporting
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 17
expressed permission

18. Two Dominant Architectures
Repository (Hub n’Spoke) -
Common in RHIOs Ph1 Ph2
H1 H2
Positives: Common Data Model
& GUI, Common Security/Access, L1 L2
Population Health Hub
Challenges: Negotiating Data Im1 Im2
Ownership, Complex and Long
Implementations, Cost Sharing, Rx1 Rx2
Higher Upfront Costs Pa1 Pa2
Example: Axolotl
Struggles with Complex Data
Ownership Issues
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 18
expressed permission

19. Two Dominant Architectures (cont.)
Federated - Common in
HIEs
Positives: Fast Installs, Data H1 Ph1 Ph2 H2
Ownership Preserved, Lower
Upfront Costs L1 L2
Challenges: Scalability, Im1 Im2
Security/Access, Standards,
Population Health Studies Rx1 Pa1 Pa2 Rx2
Example: Novo Innovations
Federated Architecture Does Not Scale
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 19
expressed permission

20. Cloud on the Horizon?
Utility Service Model
Im1 H1 Ph1 Ph2 H2 Im2
Positives: Similar to
Repository, Scalability, L1 L2
Lower Costs?
Pa1 Pa2
Challenges: Access
Privileges, Audit Trail, Data Rx1 Rx2
Ownership
Utility
Example:
HealthVault, Google Health
Trust in a Third Party Entity?
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 20
expressed permission

21. Future Trends
Massive Stimulus Funding will Distort Market
More than Doubles Current Exchange Software Market
Strong Likelihood of Many More “Santa Barbaras”
Current NHIN Vision will Never Materialize
Too Many X-State Data Ownership & Regulatory Issues
ARRA makes situation worse with new State AG powers
NHIN will Model Rail System in US, vs. Interstate System
Health Clouds will Resolve Data Ownership & Consent Issues
for “Engaged Consumers”
Despite Funding, RHIO Market will Remain Difficult
for Vendors
HIE Market: Far More Lucrative
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 21
expressed permission

22. Key Points
Two Distinct Markets, HIEs & RHIOs
Requires Separate Go-to-Market Strategies
Little Overlap in Operational Structure
Modest Overlap in Needs
No Dominant Vendors
Large HIT/EMR Vendors are Out
RHIOs are Migrating to Services
Exchanges Moving Beyond Subscription/Transaction Model
Payers Stepping Up to the Plate
Large Employers Beginning to Engage
Other Federal Agencies Showing Interest
SSA is Getting Increasingly Involved
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 22
expressed permission

23. ???
Big Question Marks
Will ONC Legitimize CCHIT
CCHIT Released New ‘09 Certification Guidelines for
Exchange Solutions
Focus on Security & Simple Exchange
Exchange one of three scenarios
Will Health Banks Gain Trust=Traction
Hybrid, Consumer/Patient-centric
Track Roll-out in WA State, 3 Sites
1 Google Health & 2 HealthVault
New HIPAA Guidelines
Interpretation of Consent in HITECH Act
Implications to Data Ownership & Sharing
Definition of “Meaningful Use of EHR”
Legislation Highlights Info Sharing
Proof via an Exchange?
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 23
expressed permission

24. Final Thoughts…
Does RHIO Know What They Are
Doing?
Do they Understand Value
Proposition?
For whom?
Ultimately, it must work for
Physician!!!
2009 is the Set-up Year for RHIOs
2010 Funding for Shovel Ready - a Rush?
2011 States Provide Matching Funds
HIEs will Move Ahead Steadily in Competitive Markets
Wild Card: “Meaningful Use of EHR”
Copyright: Chilmark Research
For internal use only, not for distribution without
March 4, 2009 24
expressed permission