Policy vs. Market-Based Reform--RHIOs as a Case Study by Brian Klepper

As Anonymouse insightfully commented over on THCB, the Harvard team's RHIO study in Health Affairs is very telling about the barriers facing do-gooder health care projects. That said, I wanted to add two comments.

First, while RHIOs are unquestionably good public policy, what they might accomplish can be seen as counter to their interests of many organizations expected to support them. (The same can be said for EHRs, by the way)

Second, this is why health care reform will emerge not from within health care and not from policy, but from the marketplace, driven by non-health care interests.

Anonymous is right that one sentence in the Health Affairs article really nails the core of the problem. The authors write,

“Whether RHIOs represent small businesses that need viable business models, which requires the ability to generate profits as well as value for participants, or public goods that require funding is an important unresolved issue.”

RHIOs are a great idea. Given our Babel of complex health care information, patients (and those paying for care) would be well served if clinicians could access their complete information when they present for services in any facility within a region. They'd be less likely to run duplicative or unnecessary tests, and more likely to properly address the patient's problem the first time.

But the truth is that few private health care organizations have reason to invest in the infrastructure required to share their data. Even though Emergency Departments could probably save significant dollars by not having to call for tests to determine information that already exists in records elsewhere, many hospital executives are reluctant to share if the result could be used to highlight their competitive weaknesses. The same goes for health plans, physicians and employers. If there is no clear financial benefit that will accrue from the effort or, worse, if there is a possible risk to one's current position, why bother, especially when there are many competing priorities for the resources.

In other words, while everyone acknowledges that RHIOs would create transparency and benefit just about everyone in health care - with the possible exception of its most powerful players - they're unlikely to come to fruition because few organizations really want to support them.

What hasn't been mentioned, though, is that Health 2.0 could soon make RHIOs obsolete, finding ways to access the data that the RHIOs have begged for. Health 2.0 firms will analyze and reformulate these data into transparency information and decision support tools, while making a profit and focusing on health care pricing/performance throughout the country rather than at just the local level. Unlike the resource-starved not-for-profit RHIOs, Health 2.0 companies are either very well established non-health care organizations, who don't have existing health care revenue streams to try to protect and who see the opportunity to make money by rationalizing health care, or health care startups with investment capital.

So, from my perspective, it looks like RHIOs will go the way of the buggy whip and camera film. They aren't working because their missions are often seen as potentially threatening or irrelevant by the organizations whose support they seek.

By contrast, Health 2.0 firms will create information that can benefit health care constituents throughout the continuum, independent of the health care industry's wishes. In the process, it will infuse health care with an unprecedented level of transparency and decision-support that will transform the way care is delivered and the way health care products and services are sold.

And it will all happen in the marketplace, where it must, because health care policy has been effectively captured by the industry, rendered meaningful policy-based reform all but impossible.

Brian Klepper