Healthcare Business News
David Brailer

New California health info exchange faces obstacles

HIE will need to make business case to insurers, providers

By Joseph Conn
Posted: August 5, 2014 - 9:00 pm ET

Plunking down $80 million and blending claims data from two giant California Blues health plans in a statewide health information exchange raises hopes that interoperability across the Golden State may finally be at hand. But neither money nor 9 million patient records guarantee the success of an HIE in a state so vast and diverse, experts say.

“The question is, what will providers think?” said Dr. David Brailer, CEO of a San Francisco venture capital fund, and former first chief of the Office of the National Coordinator for Health Information Technology. “California is a very provider-powerful state.”

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The new California Integrated Data Exchange, or Cal INDEX, launched by Anthem Blue Cross and Blue Shield of California on Tuesday has already won the backing of some powerful regional players.

Dr. David Feinberg, president of the UCLA Health System, and Lloyd Dean, president and CEO of Dignity Health, attended the HIE's kickoff press conference, where both extolled the virtues of Cal INDEX.

Feinberg called it the “next generation health information exchange.” Dean said, “We know it can save money, but most importantly, we know it can save lives.”

The founding health plans hope to have the nonprofit exchange up and running by the end of the year. And they plan to offer 32 of the state's major healthcare providers free membership for the first three years. After that, members will need to support the exchange with subscription fees. Prices were undisclosed.

Regional health information exchanges are also invited to join Cal INDEX, as are other health plans and any organization willing to share data.

The biggest question mark is whether Kaiser Permanente, the largest integrated provider in the state, and one which competes with the Blues as an insurer, will participate in the new HIE. Kaiser officials declined to comment Tuesday.

To be successful, Brailer said, Cal INDEX may not need to lure Oakland-based Kaiser into its fold. “People who go to Kaiser tend to stay,” he said. But it appears the Blues are “trying to replicate on an open architecture what Kaiser is.”

Prior to running the ONC from 2004 to 2006, Brailer served as project manager for an early HIE in Santa Barbara County, launched in 1998. “Despite the aspiration we've all had, there have been very few long-term sustainable models” of state-wide or regional health information exchanges, he said. The Santa Barbara exchange folded in 2006.

“It's not for a lack of technology,” Brailer said. “The one thing that's been lacking is a business model.”

Start-up capital isn't a problem either. The Blues' $80 million investment is more than double the $38.8 million the federal government granted to California to boost statewide HIEs under the American Recovery and Reinvestment Act. Moreover, front-loading claims data and funding the exchange through early development gives Cal INDEX a head start on reaching a critical mass of participants, Brailer said.

But that head start is no guarantee of success, based on previous HIE experiences, many of which ended after insurers failed to cooperate. “When I was in Washington, (we tried) to get the health plans involved in health information exchange,” Brailer said. “They wouldn't do it. They were concerned about their business plans being disrupted by a ubiquitous data-access model.”

Brailer said other health plans across the country will be watching Cal INDEX, because it could become something larger than simply a merging of databases. He sees it laying the foundation for a “very appy,” consumer-mobile-IT-driven healthcare system of the future, targeting younger people who will demand data access and portability.

But first, the founders have to make Cal INDEX work smoothly and convince providers and the state's other HIEs to use it.

Cal INDEX managers “have reached out to us,” said David Minch, president and chief operating officer of HealthShare Bay Area, one of more than a dozen California regional health information exchanges. “I expect that over the period of the next month or two we will have a clearer picture of content and capabilities, and of how the benefits from Cal INDEX will accrue to both providers and their patients.”

“More interoperability is a good thing,” said Will Ross, founding project manager of Redwood MedNet, a regional health information exchange in Ukiah, Calif. Ross said he has exchanged emails with Cal INDEX organizers, but, “I haven't had my conversation with them to see what their business model is.” Like Brailer, Ross said finances will be the deal maker or breaker for any HIE.

“People will share data as soon as they have a business reason to do so,” Ross said. For most exchanges, “they've not had a reason to do so.”

Follow Joseph Conn on Twitter: @MHJConn

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