PODCAST/TECH: Jeff Rose, Health Alliant Interview

For those of you who don’t want to listen to the podcast, here’s the transcript of my conversation last week with Jeff Rose from Health Alliant.

Matthew Holt: So it’s Matthew Holt from the Health Care Blog and we are doing another podcast and this one is from Jeff Rose from Health Alliant. Jeff, thanks for taking the time to speak to me.

Jeff Rose: Thank you, it’s nice to be here.

Matthew: Well let me briefly introduce Health Alliant for those of you who don’t know it. I think pretty much without question Health Alliant has created a niche for itself in being a consulting company that is helping RHIOs get off the ground. As many of the folks that read The Health Care Blog know, we’re somewhat cynical about the prospects of RHIOs here, and full disclaimer, back I think about eleven, twelve years ago I wrote a report on something called CHINs, which were in some ways precursors to RHIOs, saying that they faced a pretty bleak future and that actually came to pass. But a lot of things are different now.So for most of this conversation I’m going to speak with Jeff about the evolution of RHIOs and what he thinks they’re doing. But to start off with I’m going to ask Jeff a little bit about Health Alliant and a little bit about his background. So Jeff, can you just tell me a little bit about what you did before you got to Health Alliant, and then a little, just a thumbnail sketch about the sort of service Health Alliant is providing and for whom.

Jeff: Yes Matthew. I’ve spent all of my career in healthcare, principally between healthcare services and information technology. I began my career in information technology for Coopers & Lybrand and then Foster Medical Corporation and from there started a company in healthcare services called NovaCare, which was a very large medical rehabilitation provider.

Matthew: Sure.

Jeff: Then I’ve been involved in other healthcare service and IT related businesses, coming on close to thirty years now.

Matthew: You sound young though [laughter], haven’t been beaten up to much by the experience. So give me a quick thumbnail of Health Alliant, what it does and also it has a somewhat unusual structure for a typical consulting company.

Jeff: Yes, we do have an unusual structure. We began as a non-profit on a mission to improve the US healthcare system. Our founders included Molly Coye, David Brailer, Blackford Middleton, Bill Bernstein and myself. And then when David Brailer went to Washington as the National Coordinator for Health Information Technology had to resign from the board, and Scott Wallace of the National Alliance for Health Information Technology came on the board. I say we began as a non-profit as recently we’ve heard from the IRS that they’re questioning whether RHIOs need to be non-profits and also whether firms that serve them need to be non-profits. So we’re in discussions with them. It’s not clear what the outcome from that will turn out to be.

Matthew: Well that’s actually non-coincidental because as you probably know there was that report out today about the role of non-profit hospitals and that’s the main question and if you go back to the – full disclosure here, I used to work for IFTF which is the organization which incubated HealthTech where Molly Coye ended up and where David Brailer was working, although I wasn’t with IFTF at that time. So IFTF is also a non-profit and was constantly walking that line between what’s a non-profit organization doing consulting for non-profits and for-profits, and there’s always a sort of question in American business about what the role of non-profits is. I think that’s an ongoing question.

Jeff: I would just say that when we started this, now four and a half years ago, it was in response to what we perceived as a market failure – a market failure in healthcare in that the costs here are significantly higher than around the world. Health status is not as good as elsewhere around the world and there’s certainly questions about the quality and access to care and so what we saw was an industry that needed different kinds of support in order to move forward, to progress. And we characterized this as a market failure, and usually when there’s a market failure either non-profits step in to fill the breach or the government acts. And so we thought this was an appropriate role for a non-profit and we weren’t trying to do this as a for-profit venture.

Right. So tell me before we talk a bit more about the role of Molly and
others, tell me a little bit more about what, on a nuts and bolts
basis, you know, so we hear that a RHIO in New York or California or
where ever is setting up and people are talking about it and there’s a
lot of fuss, and no one really quite knows what that means, and I
suspect that includes the people that are talking about forming it, and
then how does Health Alliant get involved and what do you do?

Jeff: I think
the backdrop to RHIOs, it’s only nominally about technology, I believe
they are reflective of potential of a sea change in the organizing and
delivering of healthcare, for the reasons that I mentioned just a
second ago, and that technology is a strategy being deployed in order
to effect significant change. We’ve seen it in many industries where
the advent of technology has radically changed the way things are done.I
would argue that what we have in healthcare is a nearly unmanageable
situation and it isn’t that people aren’t trying to manage it, whether
you’re a physician seeing four or five thousand patients a year or a
hospital or a health plan getting manual claims data in, it’s really
not nearly impossible to manage that in a professional, modern way. And
so what I see is healthcare moving to a manageable situation.So
the notion of a RHIO, which creates a regional health information
exchange, is a critical element of that for a couple of reasons. One is
patients, they don’t have enough respect for integrated delivery
networks, the health systems, as the executives there would like and
therefore pass from system to system, doctor to doctor depending on the
circumstances. And second, all providers, and payers for that matter,
perceive themselves as patient-centric, and in fact they are, but in
total we are not. Because having ten patient-centric views is not a
patient-centric approach as an industry, it’s ten separate, unconnected
views.And so we think that health information technology has
the capacity to link these together – you need the health information
exchange in order to link the different players, and the lack of
health-information, meaning the data, is one of the major barriers
today of physician adoption of HIT, and so there’s really only two
barriers as I’ve been able to assess it – the total cost of ownership,
which is coming out of their pocket and the lack of meaningful data.So
for many of them going out and buying an EMR that doesn’t connect to
anything is like a fruitless expenditure. And so there’s two reasons
that the physicians aren’t moving forward more assiduously, you know,
the data’s not there, and second it’s expensive from their perspective.
And so, you know, I think there are two or three reasons why you need a
RHIO, because no-one will create the health-information exchange on
their own, nor, quite frankly, can they or should they.And so
you need an organization that monitors security, safety, throughput,
all the things that go into running basically a clearing house for
information. If you’ve ever been in a clearing house run by a major
bank or credit card processing firm, these are big operations and we’re
talking about billions and billions of dollars of healthcare

Matthew: So what does Health Alliant bring to the table in terms of the services you guys offer?

Jeff: We
really help with the planning, we’re not a technology firm and we’re
not a health plan or hospital. We’re independent and so we work through
the strategy, starting with the strategy and the long term vision and
concept – what exactly is it that the participants hope to accomplish?
And I would stress that we don’t think health information exchange is
an end unto itself, but rather a means to an end.So helping the
many participants of a coalition discuss the alternatives and define
the long term vision and strategy to achieve it is the starting point.
And then using a fairly traditional business planning process and
financial planning process, we create the business plan inclusive of
the profit and loss for the RHIO, the balance sheet, the fundraising.
We create with the client the technology model that they wish to
embrace, we can oversee an RFI or RFP process. We help them set
clinical priorities because the technology is really about providing
support to clinicians doing clinical work, and so the question is "What
do you want to do first?"We can address with various networker
resources some of the thorny legal and regulatory issues. We can help
the group put together the governance. We really can cover the entire
waterfront of the planning activities and financing – fundraising that
will led the RHIO to be in a position to find contracts and begin
developing and launching its services.

Matthew: Now
that’s pretty interesting, I want to jump into that as a core of our
conversation in a minute because the question about "What is the
business model of a RHIO?" and "Can these things be up and
self-sustaining?" is obviously core, and that’s where the CHINs fell
apart. But before we get there lets just address the issue of what was
written about Health Alliant and Molly Coye and Blackford Middleton and
others a couple of months back in "Modern Healthcare".Now full
disclosure, I know Molly and I know Blackford, and while I don’t know
you so well and the other folks involved. I thought this was a pretty
cheap-shot piece because it suggested that there was sort of
impropriety around awarding contracts and yet from my understanding
Molly and Blackford actually weren’t in any way involved in either
awarding of the contracts, or even if the contracts were awarded to
Health Alliant for its services, were not in any way compensated by
Health Alliant, you know there is no stock to own and that sort of
stuff. So can you just clarify their role and the connection between
what they’ve done in the past and are currently doing in the present?
And on the other side of this, where is the money that RHIOs are using
to give to you to do your work coming from? How is that working?

Jeff: Yeah,
you know, let no good deed go unpunished is how I think about the
"Modern Healthcare" article. Molly and Blackford, out of the generosity
of their spirit, have supported me in this effort for the last four
years without any compensation, giving freely of their time and advice,
as have Bill and Scott and before that David, without any expectation
of remuneration in any shape or form. So, the suggestion that they’re
profiting for this in some way is just flat out wrong. If they’re
profiting, it’s by being close to some progressive activity across the
country and being able to learn from that. They’re fabulous at
disseminating knowledge and so, to that extent, it has been a two way
street. They have not, as a rule, referred business to us in any way.Molly,
who was involved with CalRHIO and obviously HealthTech, which served as
the incubator for CalRHIO, completely recused herself from all of the
discussions and negations around our contracts, of which there were
two; there was one for planning and there was one for fundraising. As
you know, CalRHIO has been successful at raising from the private
sector probably as much money as anyone in the country.

Matthew: Right.

Jeff: I
believe that’s the case. And we had some small part in that. Our
expertise is around finance, and financing, and business models and
we’re able to communicate that to the business executives and other
potential participants and explain that this is not a technology
project like the CHINs were of ten or twelve years ago, but rather
something far more important and more deep seeded.So I think
we’re instrumental in that regard, and then we also did a planning
project for CalRHIO that was roughly a 300 page report that they have
used extensively in their discussions and their strategy planning and
evaluating their project priorities. This was a very significant
project both for them and for us. If you roll the clock back a little
bit even just a year ago, there were virtually no other consulting
firms doing this work. I would challenge people to identify firms a
year ago that were actively doing this work. CalRHIO solicited
responses from all of the major consulting firms and a lot of smaller
ones and quite frankly, we were the only one (or there may have been
one other) of ten or twelve that responded and still qualified to do
the work.

Right. In terms of them and the other RHIOs you work with across the
country, where does the initial funding to set up and then to pay you
typically come from? Obviously, the Cal RHIO has received some big
grants from foundations like CHCF and Blue Shield Foundation and others
have now put money in. But when it’s sort of 15 smart guys in a room
together, are they passing the hat amongst their own organizations to
help bring you in the first time around or how is that working?

Jeff: Yeah,
California and now New York aside as special cases. The typical
approach is passing the hat. We helped launch the Rhode Island Health
Improvement Initiative and that’s exactly what they did to pay our
initial consulting fee. Similarly in Nebraska. Usually, there’s a
significant sponsor who sees the value in laying out the plan and
building consensus or there’s the sort of passing the hat approach.
We’ve been part and parcel of both. In our Tennessee project, it was
pretty much passing the hat. Our Taconic project, the Taconic Health
Information Project Network, they received a planning grant from Arc.
So the money comes from different sources, and it then becomes a
client-consultant relationship.Our typical client is a
coalition of ten to twenty participants from the local market. Hospital
executives, physician leaders, health plan executives, public health
leaders, state Medicaid leaders. I’m sure I’ve left some – employers –
and others that have come together and said, for whatever reason, “we
have to do something about healthcare in our community.” And then they
often times spend a year trying to wrestle with what to do, and then
eventually call us and say they’ve been trying to figure out what to do
for a year about a year but can’t come to a conclusion because it’s a
very complex question and they only spend a couple hours a month on it.

Right, right. Well that sounds pretty rational. Without adding any
details, having worked with a sort of consulting company that was a
non-profit organization, it’s a fair bet that you’re not doing
rate-wise quite as well as you were doing in the for-profit sector or
at least the modern equivalent.

Let’s pull on this a little bit. What’s your
expectation? I think, you know, reason number one that you laid out at
the start which is that people move around and that you want to improve
healthcare. It’s better that we can get all the data in one place or at
least have all the data available at one time, at the point of care.
People are seeing different physicians, are attending different systems
and are at different hospitals, and all that kind of stuff. Plus we
have labs and all this pharmacy data and stuff that’s floating around.
And there’s always a big argument about, "Can you put that together?"
But assuming that that’s the main nut that you’re trying to crack,
using the RHIOs, what’s your sense of where the initial money is going
to come from to set these things up? Obviously, we had one of these
open in California with money from foundations deeply connected in
health care. And, I guess, going forward, what’s the business model
that you think RHIOs is going to adopt to actually make this happen?

Jeff: I think
you need to break it into probably three phases: a planning phase, a
developmental phase and then ongoing operations. I’ve approached this
much like an entrepreneur starting a business. In that early stage, you
need angel investors. It can be your friends, it can be your family, it
could be Arc, it could be the California Health Foundation or some
other foundation. It could be large entities in the local market or it
could be small entities in the local market. In our Tennessee project,
we had some smaller physician groups contributing $500 or $1,000.It’s
getting enough money to put a plan together. The planning process is
radically different in that is it not only cross-functional, but it
crosses multiple organizations, oftentimes with competing objectives.
It’s that element which makes it challenging. So, you need money for
planning.Second, the development is the actual creation. That
will be a combination of monies coming from the local community
hospitals, health plans, physicians, the states, sometimes even
employers and, also, working out deals with IT vendors. I would just
say that going to the vendors and asking them to contribute goods or
services is a waste of time. On the other hand, going to them with a
plan in how to over time make them whole, is a very viable approach and
one that they’re increasingly open to.

Right. My reflection is that, in the CHIN days, that was never quite
straightened out. I’m thinking of the Chicago one. My recollection is
that the hospitals all thought that the vendor was going to pay and the
vendors thought the hospital was going to pay and it all kind of fell
apart somewhere around there.

Jeff: That’s
right. Part of our message is simply to say, "Look, everybody expects
somebody else to pay for this, and that’s not going to happen. This is
only going to happen if everybody pays something approximating a fair
share."One of the principals in our Northeast Tennessee
project, what they enunciated was, "Everyone pays something." The
"something" was generally correlated to the projected benefit they
would receive from the projects. There was an alignment of the
incentives and the cost.They also didn’t want anybody getting a
free ride. That seemed like a rational approach and immediately
eliminated the "I don’t have any responsibility here. Everyone else is
responsible for financing this." That approach has failed us for 30 to
40 years now.

Matthew: Right. Your third stage of financing is what, operational? What’s your sense about how that’s going to play out?

Jeff: Yeah. I
fundamentally believe that RHIOs can be self-sustaining. There are some
that already are. The question is, "What’s the right model for the
community. Can it be sustainable?" Of course. Anything can be
sustainable if people agree to pay X, and X is greater than the total
cost of operation. That’s what sustainability means.We’ve
created a multi-tiered, multi-faceted business model that allows these
things to become sustainable and more importantly, or maybe equally
important, to raise money to get there. That’s what people invest in.
Whether it’s in the stock market or it’s in HIE, they’re investing in a
sustainable future.If you can’t give them a plan that at least projects that on a reasonable basis, no one should invest in these things.

Matthew: So,
give me some next layer of detail down about that. The New England RHIO
seems to be moving claims around and getting a fee per claim. Is that
the kind of model you’re thinking about? If we’re talking about a
physician office getting access to records that it wouldn’t otherwise
have because, somehow or another, it’s been routed via a RHIO. Are they
going to be making it pay-per-click or are they going to be paying $50
or $100 or $200 a month to join in? What’s the sense of how this
re-processing center that moves "what" around is going to be funded?

Jeff: We’re talking about the ongoing costs?

Matthew: Yeah.
The ongoing business of all this, assuming it’s up and running and
you’ve got a good chunk of the community on board. The question is,
really, who’s going to be paying what for what?

Jeff: Well,
what we have done is create a set of transaction charges and
subscription type charges and roaming type charges that spread the cost
very broadly and fairly thinly, so that no one is overly burdened. It
also aligns the cost with the projected benefits. So if the expectation
is that generic fill rates are going up then the beneficiaries of that
ultimately end up underwriting that aspect of prescribing. And if the
expected benefit is coming from electronic transmission of
prescriptions then the beneficiaries of that are pharmacies and
physicians’ offices, and they should be underwriting the cost of that
aspect. So you put all that together, you sort of tear it apart and put
it back together, and you can allocate the cost and then break it down
into a variety of different instruments that make it fairly easy to

Matthew: Now,
the two services that you use there, I was kind of imagining, probably
thinking of the experience from Santa Barbara. I was thinking of this
being more a kind of messaging system, where what’s known about a
patient is sent to the physician, to the hospital or to the pharmacist
or wherever. But you are also talking about here about transactions,
both of the things you mentioned there being connected to prescribing.
And there are obviously other transactions going on within this world,
notably there is a lot of money spent on practice management and
billing in physicians’ offices, as well as money that is spent routing
claims around, and there is fair amount of data flying around in lab
and radiology reports.You are moving that data around. Some of
that stuff hasn’t been explicitly billed for, some of it is explicitly
paid for by some actual system somewhere. Do you envisage RHIO as
taking over functions that are currently being done by clearinghouses
or billing companies or application vendors, sort of subsuming them? Or
is that going to be some positions that currently don’t have these
capabilities? How do you think is that going to play out?

Jeff: I’ve
been seeing many clients or know many clients where the RHIO is
supplanting other players or rather filling voids. So what are
clearinghouses today there for? It’s claims data.

Matthew: Yes.

Jeff: To the best of my knowledge, with a handful of exceptions there is no clearinghouse for clinical data.

Matthew: Right.

Jeff: And
that’s what an HIE is, a clearinghouse. And you can expand upon that
and say, but if you are somehow enabling a transaction what is that
supplanting? And it then goes to the question: what is the role of
RHIO? I can tell you there is a broad spectrum across the country, of
what people believe it is. There some that want to become ASP-style
vendors, working with a handful of HIT and EMI vendors, and so the RHIO
could become an ASP, a local implementation for one or several of the
EMR-type companies.So different kinds of roles are developing,
and it’s really filling a market hole, where historically no one has
created the infrastructure to move clinical information around in a
fluid fashion. And once that starts to happen, those newly formed
organizations are rightly going to look around, asking "What else
should we do, what else can we do? Is anybody else doing it, if not, do
we want to do it?" Those things are going to come up.

Matthew: It
does seem to me that if you go back the point you raised at the start
there are two problems here. One is that there is we don’t have
interoperability between systems and if you want—say what you like
about David Brailer’s overall performance—he clearly raise that as a
big issue. It’s a huge problem and got people moving towards that
whether the vendors like it or not, that train is going to chug along
now. The other side of the equation, which is something else you
mentioned, one of the things you can correlate, and I do in my blog a
lot, is the fact that we spend a lot more money on healthcare in this
country than many other countries, but many other countries have much
much higher rates of EMR used by primary care doctors and much better
centralization of records. Even before the Brits spent 20 billion
dollars they had rates of EMR use by general practitioners between 60
and 70%, way more than we have here. And I think the point that you
raised about the opening for an ASP-EMR is a very real one, and as you
know many of the vendors who are currently selling into the offices are
talking about creating ASP-based systems to sell commercially. So to my
mind that’s going to be interesting to see how that plays out because
we still have the problem of getting many hundreds of thousand of
doctor’s offices automated over the next five/ten years and it seems to
me that its irrational, if its not going to done on some big ASP or I
guess SAS, is it SAS, “software as a service” basis. It seems to me
that the RHIO could play a role in that but it’s unclear.

Jeff: And
Matthew, I would suggest that there has to be a new player on the field
because the job isn’t getting done today and so if we, in the absence
of a new player, we will continue to try and get physician adoption and
interoperability with the same players and same approaches we’ve used
for 25 years and it’s crazy to think we’ll have a different outcome
over the next few years than we had over the last few so I believe
there has to be a new player on the field.

Matthew: Which
brings us to the point and I mentioned it a little bit with some of the
certification initiatives that the now leaderless National Health
Information Technology initiative has started introducing. You’re now
at the point were you’re starting to tell the vendors that all these
things have got to talk to each other and we’re going to start
certifying what’s a medical record, what is and what it isn’t. There is
going to be some grumbling about that but it looks like a process
that’s going to have to work. The other part of this is you’re going to
have start saying to the, at some point you have to start saying to the
users — physicians and also others — that they are going to have to
play in this game. You can see that Medicare is kind of gingerly moving
down that path and obviously there is a lot of politics on both sides
of this equation. What’s your sense of the Government role currently
and speculate a bit on where you think that’s going to go and I assume
that your RHIOs is going to play somewhere in the middle of that?

Jeff: One of
the roles of Governments is to establish the regulatory structure that
allows markets to flourish and whether it was the SEC being formed,
after the market crash by the way.

Matthew: [laughter]

Jeff: Not
before but after and setting the ground rules that if one wants to be a
public company or sell shares of anything, these are the rules. I see
what we’re doing here hopefully in HIT, a similar setting, is setting
the basic ground rules. If you want to be in this market these are the
things you need to do. You have to have audited financials and you have
to have these kinds of officers et cetera et cetera. Similarly the FDA
was formed as a reaction to snake oil. People said "look this stuff
doesn’t work and there ought to be a law and there ought to be an
agency that polices this" and the FAA, Federal Aviation Administration,
was formed after there was too many crashes, plane crashes. What we
have in the United States is a highly dispersed, nearly invisible
problem with the cost and the health status and quality and access
issues that’s spread all over the country. Now it’s almost one out of
six people don’t have regular access to health care. Is this a train
wreck or what is it? We have the ability to provide some of the
greatest care in the world but on a day to day basis we have
significant problems. For the Government to establish some basis ground
rules in order to enable better performance in the market is completely
appropriate in my opinion.

What’s your sense that they’re actually going to likely do? Obviously
we have standards, there already were a lot of standards but now
we’re focusing on standards. We’re seeing certification of tools;
you’re now talking about establishing RHIOs or maybe commercial vendors
establishing ASPs and we are actually seeing a little bit of take up in
the smaller physician market and a lot of take up in the larger
physician market of some of the more advanced EMR tools, clinical
tools. We’ve yet to see the other shoe drop it terms of the government
saying "Thou shalt use this" but when you start to pay for performance
and for quality initiatives and all the rest of it, you will assume
that’s more than in the back it’s in the front of mind at CMS. What’s
your sense of how that’s going to play out in the next few years?

Jeff: Well I
think that what we’re seeing, hopefully seeing, is a confluence of
factors that are all moving towards the same point. That’s the various
pay per performance type activities, whether it’s the Leapfrog group or
Bridges to Excellence or Medicare with some of its ePrescribing
initiatives and they’ve also got pilot programs going on that are
related to pay per performance. David’s leadership was a critical
ingredient in terms of focusing peoples’ attention on the need for
Information Technology and I believe we are seeing some increase in
uptake at the physician level. It’s too soon to tell whether that has
happened, David once did an analysis of the projections going back over
ten years of physician adoption and the physician groups that were
planning implementation in the next twelve months and the numbers never
changed and the baseline stays the same.

Matthew: Right.

Jeff: And so
it’s too soon to call whether there’s going to be a meaningful jump up
in physician adoption. But as health information exchanges arise, and
two or three or half a dozen are successful – need not be 200 or 300,
you need some really good working model – then physician adoption moves
up, and becomes more commonplace, then I think we’ll see, we’ll finally
cross the chasm in terms of uptake on the technology.I believe
that we’ve mischaracterized the tipping point in health care that
relates to use of IT, because we tend to think of it in terms of five
or 600,000 physicians, but the way I think about is that what we need
to do is get to a tipping point of communities that have implemented
and see the benefit of HIT, inclusive of health information exchange.And
look, there are plenty of reports out there that say Dr. Jones or Dr.
Smith or physician practice A or B or C has seen benefits of EMRs but
that hasn’t moved the market. And so we have to ask ourselves, "why
not?" And so I think that it’s the – if you will – the denominator that
needs to be different, it’s the… what is the "it" that has to get to
critical mass? Well A, in a community, you’ve got to get to a critical
mass of users, and there have to be enough communities that people can
look across the country and say "OK well, here’s one, and there’s
another one, and this is working, and that works, " and right now, we
probably don’t have enough of those. We’ve got a handful, but that’s
probably not yet enough.

Matthew: The
handful we’ve got now, where would you say is looking like it’s showing
more promise, in terms of actually having something people can go look
at, and moving data around, and getting good utilization?

Jeff: In no particular order, this is not a…

Matthew: It’s not a ranking.

Jeff: It’s not
a ranking, it’s just as they occur to me as I flip through them. Santa
Cruz. Spokane, Washington. Cincinnati. Indianapolis. Those are some
that I think are sustainable, they are moving clinical data, they are
seeing improvements in quality, they are seeing cost savings, they are
seeing increases in physician utilization of the systems. So I think
those are five or six that are on a good path.

Matthew: And
then related to this, but not quite,there are a couple of – I don’t
want to say players – but themes going on. One is what we’ll talk now
about payer-based records, which is mostly coming from vendors
admittedly. And the other thing that’s going on, certainly related to
those plans of course, is personal health records as a key place for
capturing information, people will either physically take it from place
to place, or having another third-party holding your information which
people can get access to.Do you think that they are muddying
the waters? Do you think there’s a role for those different types of
solutions? Do you think they’re temporary stop gaps until we really get
the whole thing going? How do you think they play out?

Jeff: Well,
starting with the payer-based records, there’s a couple of different
thoughts I have there. One is, it is possible to do some good work with
claims-based data, but it’s very difficult to make it useful on a
real-time basis, so there are severe limitations to it. And you know
the old adage, "garbage in, garbage out."I think what we will
end up doing is for those that pursue that claims-based approach is
spending an astronomical amount of money in order to essentially put
lipstick on a pig. Which is claims-based data. And cleaning it
up, buffering it, and sorting it, and combining it with other things;
we’ll spend a huge amount of money to do all that, when it isn’t really
the strategic solution, it’s another band-aid.

Matthew: MedDecision is the company I’m thinking of.

Jeff: Yeah,
MedDecision is one, Active Health Management is another. They’re good
firms, they do good work with the data that is available. As one thinks
about health care in the United States strategically, you would want to
have a better data source to work with in the future. If we look at, if
we look well to five, four, or ten years, and look back, and say "Gosh,
we’re still doing things off a really crummy claims data," shame on us.

Right. Is it your sense is that we can kind of do this without health
plans? You, obviously, want, you know, support and input and,
hopefully, money, and from the mission, they’re going to be paying
quite a bit for their share of the sort of benefits and things, like
you know, the stuff Blackford Middleton’s done. Like saying that, you
know, if you reduce the prescription drug utilization, you have big
savings. Those savings go back to the health plans, and ultimately not
to the physicians. But are you saying that, in terms of the nuts and
bolts of this, that the data that’s in health plans is important to

Absolutely not. It is not all that important because health plans are
not primary sources of data. Labs, radiology, pharmacies, those are the
primary sources of data.

Matthew: Right.

Jeff: Typically, health plans are receiving are the claims that are related to all those things, not the actual data.

Matthew: Right.

Jeff: Now, if
they’re authorized they could receive the actual data, so what they
could do is build a data, build a clinical data repository for their
customers, you know their members, and so, then become a node on the
network. And that could happen. I have not heard of many health plans
establishing that. In fact, the ones that I’m familiar with have talked
more about using this as a way of further controlling the patient, and
I would just assert that with that as a going-in mind set, it makes
collaboration [laughter] very challenging.

Matthew: Yeah,
collaboration between health plans is sort of someone might tell you,
come to think of it between HIT vendors. It sounds good, but in real

Jeff: Well, it barely seems so.

Right. I assume that in the end if there’s a, if the RHIOs functioning
health, if we have health information functioning well and most
information is available, then there’s no reason why a patient
shouldn’t be able to dip into get a look at their data in their, in
some part of it, in some third-party store that allows them to look at
their data. There’s already a model for that somewhere. But do you see,
thus, what I just described, is coming to personal health records, in
adjunct of the health information exchange? Do you see the personal
health record, in some other way, there are people that seem to be
thinking about this not even within healthcare companies, companies
from outside of healthcare coming in, saying, "Hey, you know we have
this big conceivable market, and we can put their data together, and
store it for them and that kind of thing." Do you see that as being a
viable place where physicians and other clinicians are going to be able
to look to the patient for the health record, or do you think that’s
just pie in the sky?

Jeff: No, it
absolutely is. It’s not pie in the sky, and you know, it’s just, you
can look at banking or the airlines or lots of other examples, where,
you know initially, the first consumer transaction that would, that
became electronic was at the ATM, deposit and withdrawal, and then it
became transfer money. You could do other things, and then at the
retail level, there were multiple boxes. You know, one for American
Express, one for visa, one for MasterCard, one for Discover, and then
those all became one box. And, eventually, the Quicken began to offer
people automated ways to download information. Then banks began to
offer ways that you could look at your bank statement or look at your
credit card statement online. And then it became different renderings
or views of the same data.

Matthew: Right.

Jeff: And
that’s what the PHR is, and so, it becomes one more way of viewing,
essentially, that same data. And so will it happen? Of course it’ll
happen, and should RHIOs have a roll in that? Probably, but you know,
that’s yet to be seen. You’ve got to have the data first, and until
then, you know it’s just talk. And so getting the data and getting the,
you know, front-line users is really the key. That becomes, the doctors
are—at the risk of offending—the retail establishment, and they’re the
ones that place the orders and start the transaction, and they, you
know the doctor-patient relationship is, in the banking analogy, it is
the fundamental deposit and withdrawal. And what we’ve done in
healthcare is avoid automating the fundamental transaction. We’ve
automated all around it, what’s left? The only thing that’s left to
automate is that fundamental doctor-patient relationship and if you
could imagine the bank, you could do everything electronically, but
deposit and withdrawal. You’d be scratching your head saying this is
crazy. You know, the fundamental activity, I can’t do electronically. I
can transfer money around, but I can’t withdraw money? You know, so it,
we’ve got it upside-down.

Matthew: And
I’m sure that’s not the only place that in healthcare, if that’s the
case. That’s a great note to end on. So, Jeff, thank you so much for
your time. It’s been really interesting figuring out both what Health
Alliant does and how health information exchanges are going to roll out
in the future, and it’s something that we’re going to keep watching
here at THCB for quite some time. So thanks a lot for your time, it’s
been a great chatting with you.

Jeff: Matt, thank you for that, it’s been nice chatting with you, too.

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