concept of regional health information organization

Inland Empire Regional Health Information Organization
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Thursday, July 06, 2006
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RHIO BUSINESS MODELS

Report Examines the RHIO Business Model
by Colleen Egan, iHealthBeat Editor
July 06, 2006

It is commonly believed that operational self-sufficiency is an
integral component of a sustainable business model. But is this the
case with regional health information organizations? A recent report,
"Funding RHIO Startup and Financing for Life: The Survey of Regional
Health Information Finance," published by the Healthcare IT Transition
Group, surveys RHIOs nationwide and examines the sustainable business
model for the data exchange organizations. The report states that "a
thoughtful analysis of the survey results demands a challenge to
conventional wisdom."

The report analyzed 50 RHIOs in 28 states and Puerto Rico. The mean
age of RHIOs was 12 months for those in the start-up stage, 16 months
for those in transition and 59 months for those in production.
Sixty-eight percent of respondents said they expect to become
self-sufficient. However, 83% of RHIOs in start-up mode, 91% of those
in transition and 87% of RHIOs in production said they expect to
continue to rely on contributed income, according to the report. RHIOs
are formed under a federal not-for-profit status and are led by
volunteers who are required to serve the public interest.

Finding a Business Model

Defining a RHIO business model is difficult because RHIOs are unlike
any other not-for-profit organizations. According to the report, a
sustainable business model is "one in which the partners agree that
the value received is worth paying for, and at a level that covers all
costs of the organization." The community is considered one of those
"partners," and the core purpose is for RHIOs to provide a public
good, according to the report.

The RHIO business model "lies in a territory which may be much less
familiar to the commercial and health care not-for-profit leaders
represented in RHIO leadership," the report states. To understand the
RHIO business model, the report analyzes RHIOs from three points of
view:

Commercial for-profit business: Must be operationally self-sufficient;

"Commercial" not-for-profit business: Operationally self-sufficient,
income primarily comes from earned revenue; and

Noncommercial not-for-profit business: Do not need to be operationally
self-sufficient.

According to the report, "operational self-sufficiency" is defined as
an organization whose regular operating costs are covered by earned
revenue, but "that is not to say that grants and other forms of
contributed income would not be pursued from time to time to build
capacity through special capital projects." The study notes that
"government involvement in RHIO leadership does not decline as RHIOs
mature, but may actually increase."

Due to the unique position of RHIOs, they could "most usefully
identify as a hybrid of the commercial not-for-profit and the
charitably supported organization," according to the report. Under
this definition, the report states that RHIOs would raise money
through "capital development operations," such as grants, and
subsidize their operations through ongoing fund-raising activities.
While some RHIOs are moving toward operational self-sufficiency, the
report finds it likely that "as much as one-third of total RHIO
revenues will continue to come from government grants and
philanthropy, perhaps into the foreseeable future."

More on the Web:

Healthcare IT Transition Group

posted by Gary M. Levin M.D. @ 7:03 PM

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