By Gary Palgon, VP Healthcare Solutions, Liaison Healthcare Informatics
In mid-August, the state of Nevada approved a $72 million contract to establish a health insurance exchange (HIX) as required by President Barack Obama’s Patient Protection and Affordable Care Act (PPACA). Xerox State Healthcare will set up the computer operations needed to run it, a setup being funded by the federal government. The exchange is to begin enrolling people by October 2013 and become self-funding after 2014. The state will assume all costs in 2015. And Nevada is not alone — the PPACA requires all states to establish such systems.
As you no doubt know already, building a health insurance exchange will require substantial hardware infrastructure as well as software to manage connectivity and vast amounts of patient data. Not only will this be a significant capital expenditure, but much of it is “commoditized” so good money is being spent on that rather than the key applications that will facilitate a sustainable health insurance exchange. These same type of costs contributed to the doom of many e-marketplace ventures in the late 1990s and early 2000s, including Pets.com and Webvan where a solid business model could not be found before the investment capital ran out. More relevant to the healthcare industry, integration, data management and interoperability proved problematic for health information exchanges (HIEs), consuming large percentages of their capital budgets and leaving most unsustainable.
It’s time for HIXs to learn from both, failed e-marketplaces and the struggling HIEs and look to cloud-based, Platform as a Service (PaaS) models for your connectivity, integration and data management rather than spending precious capital on the same infrastructure and software. This will allow you to replace the high initial capital costs with ongoing operational expenses and to avoid re-inventing the wheel. This would then allow a much larger amount of the initial startup money to be spent directly on the expenses engendered by tracking participants and their plans and routing their insurance requests or to be saved for when your state become fully responsible for operating the exchanges.
So what are you going to do about your HIX integration and data management problems?
Until next time,