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Turning a profit by exchanging health information

Professor’s research outlines how health information exchanges can stay in business after grant funding runs out.

Assistant professor of Information Systems Jiban Khuntia, PhD, along with professors Sunil Mithas and Ritu Agarwal at the Robert H. Smith School of Business, researched a phenomenon in the US healthcare system: why health information exchanges (HIEs) fail. In theory, HIEs are great for everyone, because they assist in the exchange of digital health data for health providers like hospitals, primary care physicians, among others.

Sharing of medical charts and records provides doctors, nurses, and hospitals a better encompassing picture of those they care for. When this crucial data is incomplete, it directly affects the quality of the health care system.

“You might actually die if you do not have access to the right health information in critical times, such as a medication reacting to a unique blood group configuration.”

However, like other entrepreneurial ventures, HIEs face challenges to achieve operational maturity and financial viability. So why are they failing?

The future of healthcare relies on technology

In an attempt to make HIE firms better fit for long-term business growth, Khuntia et al. analyzed the business models of HIE entities.

His research found that grant money typically lasts between one to two years. After this money runs out, these firms found themselves to be unsustainable and several have been out of business since inception.

A few things stood out among the HIE firms that survived the honeymoon period and achieved long-term growth. By providing an extensive service bundle, older HIEs have higher operational maturity. However, a more complicated service bundle deters an HIE’s potential to achieve financial success.

Existing success of HIEs asserts the authors’ claims of evolving a growing portfolio of advanced services from initial simple service offerings. The Colorado Regional Health Information Organization (CORHIO) emerged later than the others and leveraged the success and failures of others by forming strong collaborations with health care organizations in the state.

Overall, the evidence from the research suggests that for HIEs to be profitable, they need to start by providing a set of foundational services before moving on to offer more advanced services. These firms also need to appropriately bundle the services using transaction-, subscription- or mixed-fee models. Subscription models in early years tended to fail, while transaction models saw the most success.

Business models centered on a minimum viable product are of utmost importance to sustainable HIE ventures, leading to an overall improved healthcare system because of more mature HIEs.

“Health information exchanges are great. They are able to improve healthcare and achieve better outcomes for many different types of patients.”

Professor Khuntia and his passion for healthcare

Experiencing HIE issues himself, Khuntia focused his research on this massive problem facing US health care. Specifically, he is trying to understand how the United States can be a world leader in information technology, yet its health information exchanges continue to bankrupt themselves.

“There are countries with healthcare IT that can’t match us, but they are living longer lives than us. We are doing something wrong.”

Currently, his main objective is to see how the United States can utilize information technology to better the strategy and operations of its health care delivery models.

Where the rubber meets the road: challenges ahead

These findings contribute to research at the intersection of operations management and information systems and offer important implications for HIEs with regard to crafting and evolving appropriate service offerings and revenue models. Khuntia et al are providing a well-studied business model that HIE entrepreneurs can use to bring about profitability.

“Successful HIEs are what is going to improve healthcare to achieve better outcomes.”

This study also highlights the critical element missing in our healthcare system: information at the time of need. Luckily, as HIE firms mature and become more sustainable, they will be able to provide that crucial information. Moreover, with the information finally being communicated between healthcare providers, patients will experience better care.

 

Read his full article: “How Service Offerings and Operational Maturity Influence the Viability of Health Information Exchanges published by Production and Operations Management