Sustainable RHIO Funding and the Emerging Business Model
The 2007 Survey of Regional Health Information Organization Finance
79 pages; 48 charts, tables and illustrations; 819 word index.
Michael Christopher, principal author, Senior Development Analyst, Healthcare IT Transition Group, and Martin Jensen, Chief Analyst, Healthcare IT Transition Group
The Annual Survey of Regional Health Information Organization Finance was undertaken as an independent project by Healthcare IT Transition Group in March 2006, and again in March 2007. The survey was distributed to a broad list of health IT individuals and organizations to reach out to RHIO, HIO and HIE at all stages of development, including the earliest startup stage.
After qualifying the portion of respondents that were bona fide health information exchanges, and that provided answers to required demographic and other pivotal questions such as lifecycle stage and legal structure, the 2007 responses of thirty-eight RHIOs were found eligible for inclusion in our analysis. Of these, 52% identified themselves as being in the “startup” stage, 24% in a “transition” stage, and 24% in the “production” stage. The researchers broke these six categories further into the six categories established by eHealth Initiative for its annual survey of health information exchanges in order to permit a degree of cross correlation by investigators.
The 2007 sample represents 23% of the total U.S. RHIO cohort, based on estimates of the number of U.S. health information exchanges (HIEs) by eHealth Initiative. Respondents were located in 28 U.S. states and territories from coast to coast, and ranged in age from newly formed to well-established entities with more than a decade of experience in what is now defined as “RHIO.”
Financial analysis of the RHIO space began with an examination of revenue streams, service offerings, and stakeholders as sources of revenue. The investigators divided revenue streams generally into contributed, earned, and others (including repayables such as loans and investor proceeds), and further divided earned revenue into membership/subscription fees, transaction fees and other earnings.
The report also includes data on RHIO technology spending. The investigators gathered budget data, percentages spent on each of seven categories of technology goods and services. They combined these, along with year-over-year growth data, to arrive at a U.S. RHIO Technology Market, providing estimates for 2006, 2007 and 2008. With federal participation and recent high-visibility announcements of nine digit RHIO development plans, this segment of the U.S. market is poised for rapid growth.
The report includes analysis of the RHIO purchase decision process, including a finding that RHIOs exercise substantial autonomy in purchasing with little dependence on third parties and parent entities.
The report provides an estimate of the U.S. RHIO market for each of several product categories, including hardware, software, and consulting services, among others.
From the Table of Contents
Executive Summary
Description of the Survey
Purpose
Methodology
The Survey Instrument
Respondents
Survey Structure
Overview of Findings
Reliance on Contributed Income
Some Missed Opportunities
Data Ownership Issues
We Used To Say “Technology Isn’t the Problem”
New Entry Cost Strategy
Scalable Revenue Model Lacking
The Capital Cycle
U.S. RHIO Technology Market
The Business of RHIO
Budgets
Staffing
Service Area
Service Offerings
Revenue Streams
Revenue Sources
Sources of Contributed Income
Outreach to Philanthropy
Sources of Earned Income
Providers Lead
Shifting Revenue Model
Zero Entry Cost Being Tested?
The Capital Cycle
The Non-Equity Capital Cycle
Profitability
The Capital Cycle in Good Health?
Technology Challenges
Broader Challenges
Shaping a RHIO
Value Creation
Two Monetization Approaches
Network Valuation: RHIO as the Set of Pathways
Exclusive Access to the Market
Growing with Zero Cost
Transaction Fees versus Membership/Subscription Fees
Attractions of the Membership/Subscription Fee Model
Importance of a Volume-based Revenue Model
Financial Leadership, Governance, Funding and the Emerging Business Model
Financial Leadership
Providers Lead
Legal Structure and Governance
The Accounts Receivable Paradigm
Funding
Ongoing Reliance on Contributions
The Emerging Business Model
Capital
Business Development
Basic Business Models
RHIO and Philanthropy
Weak Support At Best
Leveraging Earned Income from Charitable Support
How RHIOs Spend Their Money
Purchase Decisions
Technology Purchases
Technology Spending
Nationwide RHIO Technology Market
U.S. RHIO Technology Spending
Spending by Product/Service Category
RHIO as a Portion of the Total U.S. Health IT Market
Questions for RHIO
Appendix A: Financial Leadership Detail
2007 Startup Financial Leadership, Detail
2007 Transition Financial Leadership, Detail
2007 Production Financial Leadership, Detail
Appendix B: Income Sources Detail
2007 Startup Income Sources, Detail
2007 Transition Income Sources, Detail
2007 Production Income Sources, Detail
Appendix C: Services
Service Offerings, 2006
Service Offerings, 2007
Appendix D: Revenues
Revenue Percentages Year-Over-Year
Membership Fees and Transaction Fees Percentage of Total Income, 2006, 2007
Appendix E: Organization Age and Establishment
Appendix F: Technology Challenges
Index
About the Authors
|
