Thursday, August 23, 2007

Portland suffers from the tyranny of the status quo

The Health Data Exchange Group of Portland, Oregon is apparently on the verge of collapse, according to the Portland Tribune ("Record-sharing stalls"). The Tribune article is a very penetrating look at the difficulties of launching and maintaining an HIE.

Founded by the Oregon Business Council, the group seemed to have a lot going for it -- funding, staff, tech-savvy population, and broad-based board. According to the Tribune:

[A] year after the group began its work, the project has stalled — a victim of technological issues, and also of some overbearing financial disincentives: Some of the entities being asked to pay for the system can make a lot more money when the system isn’t in place.

On the face of it, the project seems to have violated a core principle -- make sure the first step has a business case, however small. The first project was for a "Results and Reports Viewing and Retrieval System" that would "make already-computerized information from laboratories, hospitals and imaging centers available for viewing and retrieval by all of a patient’s providers."

The project plan called for them to do this in 12 months -- wildly ambitious for a project of this scope. It took many years to get a more limited results delivery system up and running in Indianapolis, if you count the hard work done in value proposition development and business planning -- and Indiana already had an unparalleled base of technology and expertise to build on.

A second more fascinating aspect of the story is the reluctance of the hospitals to participate in the project, reportedly because a main value driver -- reduction of duplicate tests -- was going to cost them $10M in lost revenue.

In my experience, it's rare to hear someone publicly admit that they're benefiting from waste in the system, and then go on to defend it. Yet, that's what Dick Gibson, CIO of one of the hospital systems, did. He even spun the argument to defend even more economic inefficiency, arguing that redundant tests shouldn't be cut because the revenues are used to cross-subsidize free care. I'm sure that's partly true, but that's a very inefficient way to fund free care. And besides, if redundant tests weren't driving up the cost of care, maybe we'd need less free care to begin with!

I would think that the hospital boards would step in at some point and exercise the strategic judgement that I once heard from a senior executive at a large lab company: Building your business on waste in the system is not a sound long-term strategy, particularly when that waste has been exposed. In Indianapolis and Cincinnati, the hospitals pay a large share of the costs of the HIEs because there's a clear ROI for them in results delivery. The hospital leaders leading those HIEs have made the strategic decision to compete on quality, efficiency, and patient satisfaction, not on who can extract more waste from the system.

Perhaps the biggest surprise here is that those with the greatest interest in wringing out the cost of redundant tests -- namely the health plans, employers, the state of Oregon, and patients -- are standing on the sidelines and allowing the hospitals to block the project. I find it hard to believe that they'll be silent for long......


David S. said...

Lessons from Portland? My nominees:
1. Don't start too big--demonstrate success on a small scale first.
2. Have the right people pay for the right things. Health plans need to pay for things that save them money. Hospitals will not pay for innovations that disrupt their business model.
3. Be lucky. Start you work in a region that already is blessed with leaders.

Micky Tripathi said...

.Great points David. Thanks.

Anonymous said...

HIE projects are complicated, most health entities including managed care don't really understand the benefits. Hospitals cannot afford to contribute all the time and money it greatly impacts an already overburden system. We really need the state departments, gov't and health care entities whom have funds to take a closer look, at minimum get educated about the benefits of HIE and participate in solutions.

Micky Tripathi said...

Thanks anonymous. I think it's a fair point that hospitals -- or any single entity or sector -- should not be expected to burden costs that are disproportionate with the benefits that they receive. That said, I don't think it's a prudent business strategy for them to be part of the problem rather than part of the solution.