Policy vs. Market-based Reform

Posted on | January 3, 2008 | Comments Off on Policy vs. Market-based Reform

RHIOs as a Case Study

In Health Affairs, a Harvard team has published an important review of the current state of RHIOs (Regional Health Information Organizations), many of which are failing. Of 145 efforts identified in 2006, nearly one in 4 had closed by early 2007, only 20 were actually exchanging clinical information and most of those were very narrow in their scope.

It’s a telling analysis. But what caught my attention was a sentence that nails the core of the problem. The authors write:

“Whether RHIOs represent small businesses that need viable business models, which requires the ability to generate profits as well as value for participants, or public goods that require funding is an important unresolved issue.”

RHIOs, like many other important health care initiatives, are unquestionably a good idea. Given our Babel of complex health care information, patients (and those paying for care) would be well served if clinicians could access their complete information when they present for services in any facility within a region. There would be fewer duplicative and unnecessary tests, and care would more likely address the patient’s problem the first time.

But the truth is that most private health care organizations have little reason to invest in the infrastructure required to share their data. Even though Emergency Departments could probably save significant dollars by not having to call for tests to determine information that already exists in records elsewhere, many hospital executives are reluctant to share if the result could be used to highlight their competitive weaknesses. The same goes for health plans, physicians and employers. If there is no clear financial benefit that will accrue from the effort, or worse, if there is a possible risk to one’s current position, why bother, especially when there are many competing priorities for the resources.

In other words, while everyone acknowledges that RHIOs are a good idea that would create transparency and benefit just about everyone in health care – with the possible exception of its most powerful players – they’re unlikely to come to fruition because few organizations really want to support them.

Moreover, it is entirely likely that Health 2.0 will soon make RHIOs obsolete, finding ways to access the data that the RHIOs have begged for. Health 2.0 firms will analyze and reformulate these data into transparency information and decision support tools, while making a profit and focusing on health care throughout the country rather than at just the local level. Unlike the resource-starved not-for-profit RHIOs, the Health 2.o companies are either very well established non-health care organizations, who don’t have existing health care revenue streams to try to protect and who see the opportunity to make money by rationalizing health care, or health care startups with investment capital.

So, from my perspective, it looks like RHIOs will go the way of the buggy whip and camera film. They aren’t working because their missions are often seen as potentially threatening or irrelevant by the organizations whose support they seek.

By contrast, Health 2.0 firms will create information that can benefit health care constituents throughout the continuum, independently of the health care industry’s wishes. In the process, it will infuse health care with an unprecedented level of transparency and decision-support that will transform the way care is delivered and the way health care products and services are sold.

And it will all happen in the marketplace, where it must, because health care policy has effectively been captured by the industry, who will block meaningful policy-based reform.

(Brian Klepper is a health care analyst and commentator based in Atlantic Beach, FL. He can be reached at [email protected]. Opinions expressed by Health Commentary guest bloggers do not necessarily represent the views of Health Commentary.)