Health Data Sharing’s Elusive Business Case

Rupinder Colby_Head Shot.jpgThree Market Forces

By Rupinder Colby, Project Manager at Ascendian Healthcare Consulting
Twitter: @RupinderColby

‘Silo’ has recently been identified as healthcare’s dirtiest four letter word. Providers and vendors alike continue to amass patient data and resist embracing interoperability within and outside their enterprise. Despite the known benefits to care delivery and overall patient health and an increased ability to deliver cost-effective care when data is shared freely, silos persist.

It is difficult to place blame entirely on these organizations since incentives have not yet aligned to compel data sharing. The antiquated fee-for-service model dis-incentivizes data sharing by rewarding volume over value. As an example, the model financially awards providers who order duplicate tests and conduct redundant exams rather than requesting medical records from a competitor. The Accountable Care Organization (ACO) model is partly designed to encourage communication among providers, but suffers from creating larger more sophisticated data silos as these organizations attempt to prevent ‘network leakage,’ where patients receive care outside the ACOs network of affiliated care providers. Thus, the business case for data sharing remains elusive.

Meaningful Use Stage 2 begins to address this issue by setting requirements for Health Information Exchange (HIE) but the industry needs stronger market forces to encourage the elimination of data silos. Three emerging forces begin to provide the necessary influence to shift the U.S. Healthcare System towards data liquidity and a model that competes on value:

Employer Self-Insurance

With the Patient Protection and Affordable Care Act (PPACA) introducing reform, complexity and cost to the insurance market many large and small employers are examining the benefits of self-insurance. Part of the allure is that self-insured plans are exempt from certain PPACA requirements, such as the essential benefits package requirement. The number of employers opting to self-insure had been on the rise even before the PPACA was written into law. A recent Employee Benefit Research Institute report found that about 59 percent of private sector workers with health coverage were in self-insured plans in 2011, up from 41 percent in 1998. It’s not only large employers that are looking to self-insure, a myriad of small companies, which employ young healthy employees, also opt to take on risk themselves and cut out traditional insurers.

Self-insured employers will be a critical driving force behind vitalizing health data sharing through their insistence to pay for high quality care and desirable outcomes. As employers assume significant financial risk for providing healthcare benefits to their employees, they will not concede to traditional network lines drawn by insurers, IDNs and physician groups. Large and small employers will increasingly look to centers of excellence to perform high cost procedures and transition patients to lower cost local care facilities for recovery and/or routine care. This phenomenon goes against the historic in-network care model and data sharing in this environment is fundamental to success.

Consumer Driven Care

As consumerism gains increasing momentum in healthcare, the industry will need to respond by better orienting products and services to meet consumer needs. Consumer-driven healthcare continues to grow in popularity among patients and their employers, as the model can often significantly lower insurance premiums. This trend also holds true for patients looking for coverage in the Health Insurance Exchange (HIX). Low-premium plans offered in the HIX can carry out-of-pocket deductibles over $6000 for an individual and $12,000 for a family. This means patients have more control than ever as to where they spend their healthcare dollars. Naturally, the market will be segmented from casual consumers who are not highly engaged to canny consumers who are significantly engaged and knowledgeable. Regardless of where consumers reside on this spectrum they will have increased expectations of how and when they receive care and how their data is leveraged to make informed medical and financial decisions.

With tools at their disposal to effectively compare cost and quality, today’s patients are able to purchase healthcare in a new way. Like employer self-insurance, this trend also runs counter to the traditional in-network model we have had for decades. As patients opt to receive care from convenient, high quality, low-cost providers, data liquidity will become increasing important and essential to success.

Shifting Payment Models

The ACO payment structure incentivizes health data sharing to an extent but future payment models will move beyond bundled payments and shared savings with networks alone. Payments will be made directly for successful care coordination and positive health outcomes regardless of traditional networks or ACOs. As patients demand convenient, timely, high quality and low-cost care, traditional networks will see their patients seek care outside their perimeters. Coordination, cooperation and data sharing among unaffiliated providers will become necessary to compete successfully. Insurers, including self-insured employers, will penalize providers for a lack of interoperability within their enterprise and for withholding patient data from unaffiliated organizations.

As the U.S. Healthcare System slowly shifts towards a business model that no longer competes on data ownership, organizations must think strategically about data exchange and interoperability. A successful business strategy for capturing market share in this new era of healthcare will keenly focus on providing value to consumers and self-insured employers. The ability to seamlessly share data among affiliated and unaffiliated providers will be a key approach to maintaining and gaining market share. Analytics driven from this environment can be leveraged to better manage cost of care delivery and further drive an organization’s value proposition.

As the three market forces described above interact and merge the business case for data liquidity will become unequivocal, allowing data to flow freely and opening up a powerful tool to measure and significantly improve healthcare.

About the Author: Rupinder Colby is a Project Manager at Ascendian Healthcare Consulting and a frequent writer and thought leader on the Health Information Exchange (HIE), Health Information Technology (HIT) and industry transformation topics. If you have questions you can contact Rupinder via email or visit Ascendian Healthcare Consulting’s website at