Expanding the HIE Funding Pool by Redefining ROI

By Laura Kolkman, Chair, HIMSS HIE Steering Committee

As the newly appointed Chair of the HIMSS Health Information Exchange (HIE) Steering Committee, I am pleased to introduce “Ask the HIE Steering Committee,” a monthly column designed to keep you abreast of the key issues in HIE.

One of the most significant and persistent issues confronting HIE and regional health information organizations (RHIOs) is gaining the financial foothold that will enable them to deliver to stakeholders the expected return on investment (ROI). Too many rely on hospitals or state and federal grants for their start-up funds, sources that are rapidly drying up as the economy worsens.

Financial support for HIE cannot and should not fall solely on the shoulders of government and hospitals. Major employers, many of whom are self-insured, along with insurers and laboratories need to take a greater role in funding early efforts. There is little question that the long-term benefits of doing so will far out-weigh the short-term risk.

Yet these stakeholder groups remain low on the list of funding sources.  The lack of demonstrable ROI to justify their investment is often used to explain their reluctance to fund HIE start-ups. They have a point; even established RHIOs struggle to live up to the expectations that HIE would quickly deliver financial value to investors by reducing or containing costs through enhanced efficiencies, fewer duplications, and improved safety and outcomes.

The problem, from a strictly business perspective, is that those who are being asked to invest in HIE rarely realize the short-term financial benefits. In fact, the reduction in tests and other services may actually negatively impact the bottom line of some stakeholders. And while patients clearly benefit from improved continuity of care, heightened safety measures, and fewer diagnostic procedures, providers are reluctant to pass on to them the extra costs for the technologies that make those outcomes possible.

One approach is to revise our expectations of ROI. In no other industry would a start-up with the kind of capital- and resource-intensive requirements borne by RHIOs be expected to provide initial investors with immediate returns. For these types of start-ups, an ROI of 5-7 years is not unusual.

To encourage greater funding from non-government entities, we must remove financial ROI from its place of prominence when determining whether or not HIE is a solid investment. Yes, financial return is important, but it is not the primary reason for implementing HIE.

We must remember that health care, by its very nature, has a social mission. We cannot readily exchange the value of the social mission for a strict financial ROI. Instead, we must concentrate on identifying the specific value proposition of HIE for each stakeholder group.

For example, the value of HIE and health information availability for the consumer is receiving better health care; for public health it may be better biosurveillance and disease prevention; for health care providers it is providing better, more encompassing care.  These are the kinds of value propositions that must drive the development of HIE. 

Once we better understand what each stakeholder values, we will be able to design HIEs that meet those needs and offer services at a price that is attractive.

People will pay for what they value, including HIE. As long as that value is being delivered, stakeholders can justify initial and ongoing investments – even without the promise of short-term financial returns.


Laura Kolkman is chair of the HIMSS HIE Steering Committee and president of Mosaica Partners (www.mosaicapartners.com), a nationally recognized HIE consulting firm based in St. Petersburg, Fla.