Pioneering regional health network logs off for the final time

Analysts say the failed Santa Barbara, Calif., project offers valuable lessons for health-information exchanges popping up nationwide.

By Pamela Lewis Dolan — Posted April 9, 2007

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The Santa Barbara County Care Data Exchange -- often acknowledged as one of the first, if not the first, regional health information organization -- quietly shut its doors after eight years of never reaching its full potential.

While those close to the project mourn its death, others are grateful for the trailblazing efforts and think its failures have been used by other RHIOs to help them succeed.

The networks linking physician groups, hospitals and other health care entities in a geographic area are considered the underpinning for a national health network allowing easy but secure transfer of patient and health information.

Some say the way the Santa Barbara project closed -- quietly, with no official notice or media coverage -- was indicative of problems it had from the start. The project closed in January, but those outside the project didn't find out about it until more than a month later.

"Part of it [the quiet closing] stems from what I think is one of the mistakes. It's always been a hush-hush project," said Christina Thielst, a former administration and governance consultant who worked on the RHIO from late 2003 to summer 2004.

Thielst said because of its near anonymous existence, community pressure was never placed upon the local health community to fully embrace the project.

In a letter addressed to community members involved with the project, Robert Reid, MD, the former board chair of the exchange, blamed the RHIO's demise on the potential data providers' concerns over liability, and lack of funding to sustain the project.

The exchange was a peer-to-peer model in which each health care system stored and owned its own data, which could be viewed and pulled off by other exchange members.

Dr. Reid said even though the RHIO had its own legal team developing the contracts and looking at liability concerns, each hospital demanded its own legal counsel. Dr. Reid is also the director of medical affairs for Cottage Health System, a three-hospital network that was the exchange's largest data provider.

Ultimately, he said, the exchange made the mistake of not getting the liability concerns taken care of before the RHIO went live in 2006, seven years into the project's formation. Once it started, money started draining from the coffers while the respective legal teams continued to review liability issues and put off committing any money toward the project.

Thielst agrees that the liability concerns were raised too late in the game. But ultimately, she said, it was a lack of commitment that killed the project. Dr. Reid acknowledged that the exchange should have received firm, signed commitments before implementation.

Michael Christopher, chief technology officer and development analyst for Tulsa, Okla.-based consultants Healthcare IT Transition Group, characterized the problems as "first-mover disadvantages."

"They did a lot of incredible pioneering stuff then I think they just ran out of steam," said Christopher, who was not associated with the project but has researched and written numerous papers on RHIO projects.

Santa Barbara's trailblazing places future RHIO projects at an advantage, he said.

Christopher said the software the Santa Barbara exchange developed is considered an industry model. The California Health Care Foundation, which invested $10 million into the initial project, is considering turning the software into an open-source product for future RHIOs.

Financing key

Christopher said financing, not technology, will determine the success of future projects. He conducted a study of 50 RHIOs last year and found there is an ongoing reliance on grants and earned income as the organizations get off the ground.

His research found while 68% plan to be self-sufficient, more than 80% in six various stages of development said they plan to apply for grants. Nearly 90% of the self-supporting mature RHIOs said that they still anticipate applying for grants.

"Future RHIOs will need to find ways to valuate their services into care and quality propositions for its clinicians and not just to exchange data," said Mark Jacobs, MHA, vice chair for the Pennsylvania EHealth Initiative, and chair of the health information exchange committee for the Health Information and Management Systems Society.

Ray Campbell, executive director of the Massachusetts Health Data Consortium, agrees with Jacobs and said value is something his group has been struggling with as they try to determine what hospitals are willing to pay for as they work toward a statewide information exchange.

He said a service that can save the hospital money and increase revenue, such as connectivity between the hospital and a diagnostic center, for example, is one they are more apt to invest in. "But one that only exists for the social good -- why would they want to spend money on that?" he said. The organizations are businesses with bottom lines to worry about, he said.

Without hospital funding, many make the mistake of relying solely on state and federal grants, Christopher said.

While many states and the federal government have expressed a desire to expand health care IT, they are not providing enough funding to support it, he said. Future RHIOs will need to seek private funding from foundations or nonprofits with an interest in improving the quality of health care, he said.

But in some states, such as New York, millions have been set aside to fund health care technology initiatives such as RHIOs. A RHIO in the development stages in the Bronx was established with a $4.1 million state grant.

Massachusetts committed $50 million to its statewide project.

Jacobs said while Santa Barbara is seen by some as the RHIO that failed, "I see it as a worthwhile purpose that helped advance the information exchange trend line and it's helping future exchanges learn from its successes and failures."

Many feel confident Santa Barbara will eventually have a sustainable RHIO that is more successful that the last. Thielst just regrets that "instead of being a leader, Santa Barbara will follow everybody else."

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