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Health Information Exchange RHIO stabilizes fi nances

Rochester RHIO committee develops revenue plan to cover $3 million annual operating cost.

By Ted Kremer C

reated in 2006 with grant and community funding, Rochester Regional Health Information Organi- zation (RHIO) achieved fi nancial sustainability within fi ve years, now fully fi nancing its operations with stable revenue streams from usage-based service fees and subscriptions. Additional grant funding will now be required only for new projects or expansion.

Ted Kremer, MPH, is executive director of the Rochester Regional Health Information Organization (RHIO).

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The organization’s success in delivering value to the region’s healthcare sector has been the foundation of its fi nancial sus- tainability. The fi nancial strate- gies driving this success have been threefold: careful fi nancial

modeling and pre-planning, investment in campaigns to drive adoption and documenting the system’s usage and value with the Axolotl Analytics and business intelligence tools. The Rochester RHIO serves 13 counties in central New

York’s Finger Lakes region. Powered by Axolotl’s health infor- mation exchange (HIE) technology, Rochester RHIO serves 4,000 authorized users, including the region’s 15 hospitals and 400 physician practices, as well as long-term care and homecare agencies, labs, imaging groups and pharmacies. From its inception, Rochester RHIO organizers recognized

fi nancial sustainability beyond their startup grant fi nancing as their major challenge. RHIO leadership quickly identifi ed the three primary groups of HIE participants who would receive value and be potential sources of revenue: • Payers, the health plans and employers, who would benefi t from containment of healthcare costs;

• Hospitals, which would reduce errors, reduce administra- tive expense and strengthen physician relationships; and

• Physicians, who would benefi t from access to patient health information across organizational boundaries and electronic results delivery with reduced paperwork. RHIO leadership developed goals and metrics for each group, quantifi ed their value propositions and developed hypothetical revenue models. Their models provided useful directional indicators: the payers would receive the largest percentage of value from the RHIO’s HIE; hospitals would receive somewhat less value, but were still viable as HIE revenue sources.

Early in 2008, the RHIO fi nance committee developed a revenue plan to cover its $3 million annual operating cost;

18 September 2011

two-thirds would be provided by payers, one-third by hospitals. The extensive usage data and analytics provided by Axolotl Analytics in the pilot and rollout phases were important fac- tors in demonstrating the HIE’s value and securing funding agreements. Three types of user fees were defi ned: • Utility fees, a variable fee as a percentage of HIE operating cost and use;

• Subscription fees, a fl at fee to participate; and • Business service fees, a variable fee per specifi c application utilized.

In addition, the committee developed an evolutionary fund- ing model, providing a clear transition from fully grant funded to fully sustained by business service fees. During the transition phase in 2008-2010, Rochester RHIO received several major grants in addition to its growing fee revenue, allowing it to build out its services to elder-care agencies and patients, radiology report and image delivery, EMS providers and Medicaid. It also expanded its electronic results delivery services to 140 independent practices and two community health centers. In early 2011, Rochester RHIO’s system started deliver- ing detailed, individual, monthly reports to each of the HIE’s hospital members, enabling hospital administrators to moni- tor their departmental HIE service usage – including results delivery, accesses to the HIE’s virtual health record (VHR) and other benchmarks of staff adoption and meaningful use. Monthly reporting also served to reinforce the growing value of their HIE participation. To help enlist the participation of independent practitio- ners and patient acceptance, Rochester RHIO launched an aggressive program of presentations to the region’s medical groups and practices. It also launched an extensive marketing campaign explaining the care and patient safety benefi ts of electronically sharing patient information. The presentation program, direct mail, radio, TV and PR campaign was success- ful. Physician adoption and patient consent proved far easier than anticipated.

Three major regional healthcare plans began supporting 66 percent of the RHIO’s operating budget via a claims contribu- tion mechanism in 2009. As of 2011, participating hospitals contribute approximately 30 percent of the annual budget with a subscription plan based on results delivery transac- tions. The remainder is provided by fees for specifi c services and grants.


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