In pockets of innovation around the country, healthcare organizations are redrawing the boundary lines of competition, electing to work together in arenas of information services where providers typically battle for an edge.
Instead of building their own pricey networks to connect with physicians and other business partners, organizations are sharing the expense of fashioning one network in a region that will serve the common need for connectivity.
Instead of trying to impress doctors with services that improve business and clinical practices more than a rival provider organization could, they're putting aside one-upmanship and coordinating the rollout of regionally accessible computer applications.
Instead of trying to individually provide and pay for a level of data security that meets federal mandates and local concerns, experts throughout a region are putting their heads together on sure-fire ways to route confidential data securely to authorized recipients.
The regional initiatives recognize that healthcare organizations can cooperate to share the cost burden of operating in a high-tech era in return for collectively reaping big returns on their collaborative investments. That still leaves plenty of room for competing on the best use of economically deployed information resources.
"We're willing to take a risk on competing at the end of technology instead of competing with technology," says William Finney, senior vice president and chief information officer of the Health Alliance of Greater Cincinnati.
In taking the risk, providers are finding that cooperating on technology for the good of all can be very good indeed.
In Cincinnati, where an Internet-based application is delivering clinical test results over a collectively sponsored network, one health system reports that it's getting a big bargain compared with cutting its own deal.
"We saved about 80% of the upfront capital cost and about 40% of the ongoing operational cost by doing this as part of a community initiative rather than doing it on our own," says Raymond Pierangeli, senior vice president and CIO of Mercy Health Partners, a six-hospital regional network with nearly 90 care sites scattered around the Cincinnati area.
The deal on information system implementation is only the start of the cost benefit, however. The biggest impact is yet to come in the productive use of the information.
According to a recent analysis of time and steps saved through automation, the application involving clinical messages has the potential to cut expenses in physician offices by $55,000 per year per physician. That doesn't include savings from several other applications already in operation and the many others envisioned as part of the regional collaborative effort.
Using the outsourcing principle
The hub of healthcare network activity in Cincinnati is a not-for-profit corporation funded initially by seven area healthcare organizations and now attempting to include all providers and payers. Called HealthBridge, the corporation is responsible for expanding and accelerating the pace of healthcare information access according to the wishes of member organizations and community representatives.
In essence, healthcare organizations in Greater Cincinnati have outsourced a set of information systems functions to an outside contractor they created together.
It's a model used in several regions where providers and payers want to conquer the high cost of implementing technology, avoid redundancy in serving overlapping constituencies and exchange patient data on a more comprehensive basis independent of network affiliation.
The efforts also are similar in their focus on using Internet technology to its fullest extent in private networks called intranets. The common Internet protocols and security provisions are enabling these regions to interconnect facilities, make existing sources of hospital-based information accessible, break down barriers of distance and deliver new and desirable healthcare information services as they become available using the same established networks and connections.
* In Dayton, Ohio, an initiative of the Greater Dayton Area Hospital Association dating back to 1993 has blossomed into a practical way for competing hospital systems to share the costs of pushing medical information out to physicians, many of whom are on staff at multiple hospitals with different system affiliations. "It's silly to build two or three networks in town, in a city this size," says Paul Jones, CIO of Premier Health Partners, a two-hospital system.
* In Boston and eastern Massachusetts, the prominent health systems joined with the market's dominant managed-care organizations four years ago to set up the New England Healthcare EDI Network, which interconnected the information networks of the participants and coordinated the implementation of a regional data exchange. An initial campaign to automate insurance eligibility transactions has transformed that process, and new transactions are being added one by one (See Eye on Info, Oct. 2, 2000, p. 26).
* In Santa Barbara County, Calif., about 100 miles up the Pacific coastline from Los Angeles, groups of providers and business partners are working intently to establish communication networks based on the latest in Internet technology. The groups, called "care data alliances," share control of the Santa Barbara County Care Data Exchange, which directs everything from research on software applications to standards for interconnecting care data alliances and instituting innovative security structures.
De-emphasizing competitive edge
Faced with knitting together so-called integrated delivery systems, some healthcare organizations are sinking millions of dollars into technology with the goal of creating a competitive edge over their rivals (See p. 8). But in markets such as Dayton, where Premier Health Partners goes up against the likes of four-hospital Kettering (Ohio) Medical Center, the investment in technological superiority doesn't make sense, Jones says.
Implementing a cutting-edge healthcare computer application "is not a long-term competitive advantage, and we'd be wasting a lot of cash," he says. All it would do locally is "increase the cost of healthcare trying to keep up (with others' technology investments). If I can buy the product, Kettering can buy the product."
A cooperative called the Greater Dayton Area Health Information Network, or GDAHIN, spent the past several years building a secure intranet with the ability to connect with hospital information systems. ItOs now coordinating the rollout of an application that improves the process of supplying physicians with demographic and other patient information.
The impetus for the regional network was improved healthcare quality through information access, but providers had practical business reasons as well, says Joseph Krella, president of both the Greater Dayton Area Hospital Association and the GDAHIN.
"We created (the) GDAHIN so we could eliminate the duplicate spending on connectivity," Krella says. "Now we are the portal. We provide the connections. We are basically a one-stop shop for connectivity, applications and data."
The GDAHIN won't supplant or conflict with existing operations at the organizations participating in the collaboration. At Kettering, for example, a sophisticated set of hospital applications from IDX Systems Corp. runs on workstations in a private network covering its four Ohio hospitals: Charles Kettering Medical Center in Kettering; Sycamore Hospital in Miamisburg; Grandview Hospital and Medical Center in Dayton; and Southview Hospital and Family Health Center in Dayton.
Where the regional network came in handy a few years ago was in extending access to information from that hospital information system to physician offices, says Nyle Morgan, Kettering's director of information systems.
The information system normally depends on a sharing of processing power between a computer server and the individual computers connected to it in a network. Under that plan, Kettering would have had to install special software on high-end computers at 37 multiple-physician practices as well as maintain and upgrade them individually. The cost: $125,000 for the initial setup and $100,000 per year in maintenance.
Instead, the hospital organization made available a GDAHIN-supported computer application through the regional intranet. The application from IBM Global Healthcare, called the Health Data Network, or HDN, pulls out demographic and insurance information and makes it available to authorized physicians and staff on whatever computers they have. "It saved us from having to deal with all those physician offices," Morgan says.
When competitors buy into the potential for group benefit, the notion of competition changes, says Rick Moore, CIO of TriHealth, a two-hospital system based in Cincinnati. "It forces us to think in a community view, not just (by) facility or system," he says. There are still plenty of areas in which provider organizations can differentiate themselves without spending on duplicative information technology, and members of HealthBridge now assign that part of the business to a "demilitarized zone," Moore says.
That zone originally covered connectivity, but as new healthcare innovations present opportunities, "We keep moving the demilitarized zone," he says. "The further we move it, the more cost savings we have."
Mercy Health Partners was on its own scouting expedition to replace an older application for clinical messages when it locked onto an Internet-based system developed by Axolotl of Mountain View, Calif. But instead of trying to get a jump on competitors, Mercy shared its research with other HealthBridge participants and got them enthused about collectively buying a regional software license, says Pierangeli, Mercy's CIO.
He says his decision ultimately was the best one for Mercy, as evidenced by the 80% price break.
And with one software contract good for up to 5,000 physician licenses in the region, each competing healthcare system avoids the duplicative cost and administration involved in licensing the same physicians affiliated with several systems, he says.
In Santa Barbara County, the willingness of four competing hospitals and their business partners to follow a common standards-based approach and share their network-building accomplishments was key to launching the countywide project with $10 million in funding from an $800 million healthcare foundation.
"Everyone involved sees the advantage of doing this on a countywide basis," says Philip Greene, deputy director of the Santa Barbara Regional Health Authority, which administers a Medicaid managed-care program in the county. "No one has seen it as an avenue for only advancing their own business interests."
Outside forces at work
The healthcare organizations comprising these initiatives didn't just decide one day to collaborate. Usually they were driven or enticed by market forces bent on taking costly duplication and fragmentation out of local healthcare delivery.
"Every market has a driver. But who they are and what they do are different," says David Brailer, M.D., president of CareScience, the healthcare information services company acting as outside contractor for the Santa Barbara County effort.
Several forces came together to get that effort going: a medical community open to the idea of sharing information, a large healthcare foundation looking for ways to improve information sharing on behalf of the public and an entrepreneurial company searching for a testbed for Internet technology innovation.
All three forces were necessary, says Cynthia Bowers, M.D., president of the county medical society, who saw significant interest among doctors in developing a countywide solution to the sketchiness of patient records but no mobilizing agent. "There were so many different groups talking about this, saying we want to do this. It took a catalyst to say, 'Let's do this together,'" Bowers says.
They found the catalyst in the California HealthCare Foundation, founded in the public interest in 1996 when Blue Cross of California was converted to for-profit WellPoint Health Networks. Bowers says county advocates seeking support from the foundation got a warm reception from grantmaking officials who were seeking promising ground for just such an experiment. "They were looking for a county where people were actually talking to each other," she says.
Meanwhile, Philadelphia-based CareScience had a plan of execution in mind for regional sharing of medical data using Internet technology and an approach to security that it wanted to test and then market nationally. The company was hired to organize and direct the countywide project.
The Cincinnati effort, by contrast, began as the provider community's response to pressure from local businesses seeking relief from high healthcare costs. Led by prominent employers such as Procter & Gamble, General Electric, Kroger and Cincinnati Bell, a business coalition in the early 1990s set up a computerized reporting system for hospitals to submit data on their clinical costs and be compared with one another as a condition of doing business with healthcare purchasers.
"Hospitals' reaction was the same as when you get your arm twisted," says Robert Steffel, executive director of HealthBridge. "They did it, but they were not happy about it."
Employers saw results as hospitals sought to keep their costs in line with market norms, but hospital officials wanted to find a better solution than using measures such as length of stay as a proxy for quality, Steffel says. Out of that dissatisfaction, the metropolitan hospital association formed a task force called the Health Improvement Collaborative to engineer improvements in healthcare outcomes management.
Competing providers, all feeling the business heat, "started down a path to collaboration" that culminated in the launch of HealthBridge in January 1997, Steffel says.
Taking it on the CHIN
HealthBridge was founded on a set of guiding principles that called for a neutral effort on behalf of the community as a whole -- no participant could benefit from the arrangement at the expense of others, Steffel says, and founding members agreed to Obend over backwards to get others to join.
Participants also resolved to minimize financial risk to the healthcare community in efforts to build connective networks while investing in methods of maintaining confidentiality of all medical information (See chart, p. 28.)
Those principles were learned the hard way. Before Cincinnati became a fledgling success story, it first had to go through a high-profile failure trying to execute an ill-fated concept called a community health information network. Known as CHIN, the regional effort got as far as initial agreement on a design and contractor by 1995 but came apart at the seams less than a year later.
The objective of sharing information regionally was the same as it is today. But instead of a gradual and measured approach to development, leaders attempted to do too much at once without first resolving the cost/benefit question and answering concerns about how proprietary and sensitive data would be shared in a common network.
Ultimately the initiative flopped for a host of reasons, as summarized in a 1998 post-mortem by HealthBridge looking back at hard lessons learned:
* The scope of work was significantly underestimated. The CHIN was envisioned as a "whole community" system connected to existing clinical systems, but this kind of application did not exist and there was no base of experience to know how impractical these efforts were. Yet the planning turned into wish-list making and created the kinds of expectations for rapid delivery of systems that undermined the credibility of CHIN efforts.
* Without Internet technology, the CHIN effort faced the sheer technical challenge and attendant costs of using a commercial network. Communications companies rushed in expecting a new and potentially profitable use of their infrastructure. Among other things, that put a for-profit vendor in the middle of the mix instead of a neutral organization and led to "convoluted charge structures" for potential participants. High costs and profit motives led to insistence on long-term contracts with participants before any value was delivered.
* The competitive and profit-minded atmosphere extended to business models that favored one type of participant over another. Rival healthcare organizations threw their weight behind certain vendor contestants in hopes of gaining equity positions, creating an unequal situation among otherwise similar participants. IBM Corp. ended up as the "preferred vendor" for the pilot project.
* Businesses and individuals alike had a critical need to know that participating in a community data network would not somehow disadvantage them or invade their privacy. But the CHIN in Cincinnati hinged on development of a central database, which did not gain trust and support.
Steffel played a role in dismantling the CHIN initiative after he became CIO of TriHealth, formed in 1995 through the merger of Bethesda and Good Samaritan hospitals in Cincinnati. "I came in and said this will never go," he remembers. He saw instead "a multimillion-dollar risk with no guarantee of anything happening at all," with the CHIN vendor in a powerful position and little hope that the effort would reach the minimum 15 hospitals necessary for financial critical mass.
At an informal meeting in early 1996 on the planOs prospects, Finney, Pierangeli and Steffel -- all competitors -- reached a consensus that the plan was wrong for their hospitals and likely wrong for the community. At the same time, they were seeing the first signs of the Internet's potential to solve problems of network cost and control, enough to justify a practical and measured exploration, he says.
Taking their assessment back to their chief executive officers, the information executives had 60 days to think of an alternative, and the HealthBridge movement was born. By December 1996 seven healthcare organizations contributed $250,000 each as an interest-free loan to start the neutral organization, and it was incorporated in January 1997. Steffel took the job of executive director nine months later after the governing board's recruiting efforts came up empty.
Fifty miles north in Dayton, collaborators in the GDAHIN faced much the same problems making the network cost-effective and technologically workable. But the area hospital association assumed governing control at an early stage and started with a limited scope of pilot projects (See Eye on Info, May 29, 2000, p. 42). After struggling for years with limitations of communications technology, the GDAHIN revamped itself as a regional intranet and accelerated both usage and services in the past two years.
Hurdling the security barrier
All the regional efforts independently determined that data security concerns are serious impediments to acceptance of an electronic data network. Conversely, they discovered how attractive the network becomes when those concerns are addressed.
Early in the development of HealthBridge, a secure e-mail system based on Web browser technology was established to provide the secure backbone for communications. That system now forms the distribution network for sending clinical messages, but just as importantly it provides a sense of confidence in confidential data-sharing that the CHIN initiative did not begin to address, Steffel says.
"To me, in spite of everything else that was wrong, (the confidentiality problem) was the one thing that was the biggest obstacle," he says.
In Dayton, the move to a secure intranet has spurred a sixfold increase in the number of users to 2,500 as of last December from fewer than 400 in mid-1999, the GDAHINOs Krella says.
It's no coincidence: Though the GDAHIN is compiling a broad array of connections to hospitals, payers and other information sources, the intranet availability comes first to mind as a benefit to physicians, says Robert Barker, M.D., an intensivist and frequent user. "The secure access routed to (the) GDAHIN is super," he says.
The year-old community initiative in Santa Barbara County has security on its front burner. One of the first projects, already being tested, is a technology that can authenticate the identity of a clinician, determine his rights to certain information and then poll all systems interconnected in the county to locate and retrieve information on a specific patient, Brailer of CareScience says.
Because the information is dispensed only in response to an authorized request, the so-called Healthcare Information Locator System reduces the likelihood that test results will be sent to or viewed by someone without appropriate rights to the data, he says.
The system also establishes a standard for security that governs exchanges between healthcare organizations, and it makes the Santa Barbara County Care Data Exchange a logical and appropriate guardian of patient confidentiality across a wide area, he adds.
That plays into the patient-protection considerations mandated recently by regulations of the Health Insurance Portability and Accountability Act of 1996, but local physicians see that benefit as incidental, Bowers says. "The barrier has always been security," she says about acceptance of electronic data networks. "We do have a much higher responsibility for (security of) a medical record, even without HIPAA."
Bringing in a technology contractor for the county's healthcare organizations provides "the opportunity to get what we want and overcome the barrier of security," Bowers says. "I see this as outsourcing to someone who knows the drill and the regulations."