RHIO stabilizes finances

Ted
Kremer

Created in 2006 with grant and community funding, Rochester Regional Health Information Organization (RHIO) achieved financial sustainability within five years, now fully financing 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.

The organization’s success in delivering value to the region’s healthcare sector has been the foundation of its financial sustainability. The financial strategies driving this success have been threefold: careful financial 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 information 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 financial sustainability beyond their startup grant financing as their major challenge. RHIO leadership quickly identified 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 benefit from containment of healthcare costs;

• Hospitals, which would reduce errors, reduce administrative expense and strengthen physician relationships; and

• Physicians, who would benefit 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, quantified 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 finance committee developed a revenue plan to cover its $3 million annual operating cost; 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 factors in demonstrating the HIE’s value and securing funding agreements. Three types of user fees were defined:

• Utility fees, a variable fee as a percentage of HIE operating cost and use;

• Subscription fees, a flat fee to participate; and

• Business service fees, a variable fee per specific application utilized.

In addition, the committee developed an evolutionary funding 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 delivering detailed, individual, monthly reports to each of the HIE’s hospital members, enabling hospital administrators to monitor 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 practitioners 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 benefits of electronically sharing patient information. The presentation program, direct mail, radio, TV and PR campaign was successful. 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 contribution mechanism in 2009. As of 2011, participating hospitals contribute approximately 30 percent of the annual budget with a subscription plan based on results delivery transactions. The remainder is provided by fees for specific services
and grants.

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