Officials in Massachusetts announced this week that the state has received nearly $17 million in funding from Medicaid to help get its health information exchange (HIE) up and running. The state's plans to use that money for a cloud-based HIE infrastructure puts it at the front of an emerging trend: states looking to software-as-a-service (SaaS) providers to lower the barriers to setting up an HIE.
More on emerging state health information exchanges
Cloud HIEs make sense to Midwestern state HIT coordinators, too.
List of state HIEs from the HITECH Act
Is Direct the means to an end, or vice versa?
Few IT initiatives present as many technical challenges as building a statewide HIE infrastructure. Configuring software and acquiring the necessary hardware are just two components of this type of initiative. States must also develop governance structures to protect patient data and govern provider participation. The diversity of issues that arises can make getting an HIE off the ground challenging.
This is why states are increasingly outsourcing those challenges to cloud-based services. Manu Tandon, chief information officer for the Massachusetts Executive Office of Health and Human Services and state HIT coordinator, said that the state has contracted with private organizations to host a push-messaging system in the cloud that enables Direct message exchange, which should be operational by October. The state plans to roll out more robust record retrieval services to physicians by 2014 or 2015.
While the infrastructure that enables these types of operations to take place will be hosted remotely -- Massachusetts will not own the infrastructure -- Tandon said it will not operate in the way that most people expect when they think about clouds. The remote servers will not store any patient information, but only the software and server space that is necessary for data transfer.
Paul Viskovich, president of Orion Health North America, the primary company Massachusetts contracted with to host the cloud-based components of the system and get the HIE up and running, said taking a cloud-based approach to HIE hosting reduces the barriers to standing up an exchange.
For one thing, costs can be lower, Viskovich said. Private companies that operate cloud systems can offer economies of scale when it comes to servers and software. Furthermore, contracting with a private group allows states to avoid the need for setting up their own data centers, which greatly reduces costs.
At this stage of the game, things are still in such an evolutionary stage, and having the ability to purchase a service -- as opposed to making some capital purchase for all the pieces -- was viewed as an advantage.
Sandy McCleaf, ConnectVirginia director
"All of the entities that are standing up state-based HIEs around the country don't have the infrastructure to have their own data centers, so it's more efficient," Viskovich said, to let SaaS providers take care of the hosting. Orion Health also hosts HIE cloud services for Alaska, Louisiana, Texas and Washington, D.C.
Sandy McCleaf, director of ConnectVirginia, a public-private group setting up a cloud-based HIE in Virginia, said the benefits of remote hosting go beyond cost savings. It also helps streamline the technical aspects of setting up an HIE. For example, she said that data centers, software and security protocols all need to operate seamlessly. Therefore, it doesn't make sense to purchase and set up these features separately and spend more capital integrating them. Cloud-based systems have allowed ConnectVirginia to avoid having to put in place multiple pieces at different times.
"From my perspective, it's all one service," McCleaf said. "I don't have to acquire multiple pieces. And it's expandable to whatever degree it needs to be. At this stage of the game, things are still in such an evolutionary stage, and having the ability to purchase a service -- as opposed to making some capital purchase for all the pieces -- was viewed as an advantage."
Colin Barry, president of MEDfx, the company providing the technical infrastructure to ConnectVirginia, said that cloud-based HIE initiatives allow states to modernize their health care industries in much the same way that other sectors of the economy have progressed.
Most experts agree that opening up the flow of information will help to bring new efficiencies to health care and therefore lower costs. Furthermore, new regulations in the Affordable Care Act encourage the development of accountable care organizations, which rely on data exchange. But the heavy cost burden of setting up data centers to build the necessary HIE infrastructures may hold many states back from putting in place the systems necessary for data exchange, Barry said. Cloud-based systems can alleviate the cost burden.
"Given the Affordable Care Act, there's a thirst for the kind of data that supports the kind of health care system we're moving into," Barry said. "Health information needs to flow from organizations that are not talking today." He added that states can become the conduits that enable this type of information exchange.
HIEs could play an important role in helping local physicians comply with emerging regulations, Tandon said. The Massachusetts exchange will eventually help physicians report data to federal authorities for Medicare quality programs and the meaningful use program.