Guest Blog from Chillmark Research .... The Great Land Grab of 2010 or the Play for State HIEs

Colleagues,

See this insightful blog posting from the always useful Chillmark Research Blog, click here to visit. Here is an excerpt, the full blog can be reached at: http://chilmarkresearch.com/2010/02/25/the-great-land-grab-of-2010-... ...

ENJOY!

CC
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The first major distribution of HITECH Act funds occurred a couple of weeks ago when HHS awarded nearly $1 billion for HIT initiatives including $386 million to 40 states and territories
to help establish public Health Information Exchanges (HIEs)...

... Sixteen states did not receive funds including some of the largest states (by population) including Texas, Florida, and New Jersey. Other states not receiving funding in this first round include: Alaska, Connecticut, Idaho, Indiana, Iowa, Louisiana, Maryland, Mississippi, Montana, Nebraska, North Dakota, South Carolina, and South Dakota. These states will likely receive funding in the next round...

... Funding Requirements (or how to get the $$$):

In its Funding Opportunity Announcement (FOA) last August 2009, the ONC identified 5 “Essential” Domains for HIE funding:

Governance
Finance
Technical Infrastructure
Business and Technical Operations
Legal/Policy

... To specifically get the funding, states had to submit an initial application by October 15^th to the Department of Human and Health Services. Additionally, states also have to submit a Strategic and Operational Plan. The Strategic Plan contains the State’s vision, goals, objectives and strategies for statewide HIE including the plans to support provider adoption. The Operational Plan contains a detailed explanation, targets, dates for execution of the Strategic Plan. Basically, states applying for funding fell into 3 general groups:

States with no existing Strategic Plan – ... A limited number of states fell into this group including Arkansas, Illinois, Iowa, New Hamphsire, Nevada, North Dakota, Oklahoma, and South Carolina.

States with existing Strategic and/or Operational Plans that are not consistent with ONC criteria – ... Almost all of the states fall into this category with about half needing to further align their Strategic/Operational Plans with ONC criteria required prior to the Implementation phase and the other half needing additional planning efforts required prior to the Implementation phase.

States with existing Strategic and/or Operational Plans that are consistent with ONC criteria – ... Only 4 states (Delaware, Idaho, New Mexico, Utah) submitted Operational Plans by October 15^th.

... Once the State’s Strategic and Operational Plans are approved, the State is free to begin to use the HIE funds for ‘Implementation purposes.’ From a Technical perspective, this means that the State can use these funds to select a vendor, sign a contract and begin actual development of the HIE infrastructure...

Impact on HIE Vendors

... Now that the awards are official, states across the country (and territories) will work with consultants to finalize their Strategic Plans and begin looking for an HIE vendor. In total, about
20-22 states are expected to issue RFPs for technical infrastructure over the next 6-12 months.

This is creating a giant land grab as vendors vie for position to tap this windfall of State HIE funding ...

Confusion Abounds

... All of this activity is creating a great deal of confusion in the market for those looking for an HIE solution. HIT vendors of all stripes are now claiming to be HIE vendors to tap into this new found
source of funding. One could even argue that IBM’s recent acquisition of Initiate was to some extent prompted by all this activity in the HIE market. While numerous HIT vendors claim they have an HIE solution, only a handful have a solution that meets current and immediate future needs of the statewide HIEs. Most others have specific HIE functionality elements, but not necessarily the full solution package. Our forth-coming HIE Market Report (hope to have it on the streets by end of March) will seek to provide clarity by providing a market classification schema...

... Vendors are also facing several challenges responding to these RFPs, primary among them, little commonality from one state to the next. The most obvious one is that each state has their own unique approach to their technical architecture...

...While being rewarded with a statewide HIE contract represents a significant win for a vendor, especially for smaller vendors, the real value (i.e., money to be made) is not from the initial
contract of simply ‘connecting the pipes.’ The long-term value will come from deploying higher-value add applications and services such as analytics, quality reporting, transactional services which typically are 5x-7x more lucrative than basic data exchange services....

No Clear Leader

Our research has not identified any clear leader in the state HIE market today. Part of the reason for this is that few states have begun the process selecting an HIE vendor, let alone go live with a solution. If pressured, we would give the leadership crown to Axolotl who has had almost a singular focus on such public exchanges and now supports 4 statewide HIEs. Axolotl’s leadership, however is a tenuous one as there are several other vendors with at least one statewide HIE client including Medicity, Intersystems, and GE Healthcare. This market is
clearly one that is wide open and we foresee significant activity in the coming 9-12 months. Let the Great Land Grab of 2010 commence!

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