The Health Record Banking Alliance: Business Considerations

2. The Health Record Banking Alliance:Business Considerations Edward H. Shortliffe, MD, PhD Chairman, Advisory Board Health Record Banking Alliance (HRBA) www.healthbanking.org Panel on Privacy - III Defragmenting Individual’s Health Data:It’s Time for Health Record Banking Medinfo2013, Copenhagen, Denmark August 23, 2013 With thanks to William A. Yasnoff, MD, PhD – President, HRBA

3. Health Information Infrastructure (HII) • Goal: “Comprehensive Electronic Patient Information When and Where Needed” • Individual (patient care) • Aggregate (public health, research) • Reduce errors, improve care, decrease costs – for both individuals and the population • Components • EHRs – all information electronic • Health Information Exchange (HIE) – mechanism for finding, aggregating, and delivering comprehensive records for each person

4. Health Record Banking Alliance™ • HRBA: • Non-profit organization comprising leading healthcare information technology professionals and organizations who are dedicated to promoting and supporting the development of health record banks • HRBA Goals • Promote community repositories as an effective and sustainable solution for electronic health information • Provide assistance to communities building health record banks • Promote necessary legislation and regulation consistent with community health record banks

5. Recent Viewpoint Article in JAMA

6. Disadvantages of the Distributed Modelfor Health Information Exchange • Complex and expensive • Prone to error and insecurity • Increased liability • Not financially sustainable • Unable to protect privacy effectively • Unable to ensure stakeholder cooperation • Unable to facilitate robust data searching JAMA, March 13, 2013 – Vol 309(10):989-990

7. Advancing Interoperability and Health Information Exchange • CMS Request for Information • Notice document issued by the Centers for Medicare Medicaid Services (CMS) on March 7, 2013 (p. 5 of Federal Register) “ [Our current efforts] alone will not be enough to achieve the widespread interoperability and electronic exchange of information necessary for delivery reform where information will routinely follow the patient regardless of where they receive care.”

8. HRBs Overcome Key Challenges • Making Information Electronic • Business model provides free EHRs for physicians • Stakeholder Cooperation • Patients request data all stakeholders must provide them (by law) • HRB profit allocations to data partners • Privacy • Patient control all individuals set their own privacy policy • Financial Sustainability • New compelling value for patients ~ $20+/person/year recurring revenue

9. HII Business Model Problem • How Can HII be Sustained? • Why build if it cannot be sustained? • Critical early question for any IT system • Persistent Unsolved Problem • Involves both cost and value • Three Business Model Categories (not mutually exclusive) • Taxation • Leverage Health Care Savings • Leverage New Value Created

10. HII Business Model:Option 1 - Taxation • Rationale: HII is public good, all should pay • Possible mechanisms • Excise tax on health insurance claims (VT) • Excise tax on hospital charges (MD) • Essentially “universalizes” HII component of healthcare • Politically unpopular & difficult • Especially when amount is non-trivial • Early $50B/yr estimated cost for HIEs  $166/person/year [$55/mo for family of 4]

11. HII Business Model:Option 2 – Leverage Savings • HII expected to reduce health care costs by 3-13% [8% is a good working estimate] • 8% x $2.6T = $208 billion/year • Problems • Savings not proven • Allocation and timing of savings? • “Savings” = “Lost Revenue” • Has consistently failed in communities • No responsible CFO will pay now for unproven future savings

12. HII Business Model:Option 3 – Leverage New Value • Rationale: Stakeholders should be willing to pay for new value created by HII • Examples of new value • Replace paper delivery of lab results (75¢) with electronic delivery [Indianapolis] • Reminders and alerts • “Peace of Mind” – ER notification • Prevention Advisor • Medication refill reminders • Research queries (require searching) • Advertising (to consumers)

13. HRB Implementation Strategy Stakeholder Cooperation PATIENT CONTROL ensures reinforce protects provides Key Design Decisions Electronic Patient Data Financial Incentives Privacy ensure enables produces CENTRAL REPOSITORY Benefits 1. Clinical: Quality, Costs 2. Reminders/Alerts 3. Research results in pay for allow Low Costs Estimated Startup Costs: $5-8 million Marketing: Free/subsidized EHRs for physicians Physicians recruit patients for free HRB accounts ◄

14. $ More complete electronic health record information Patients choose optional services with compelling value Free benefits to physicians and patients Patients sign up for HRB (recommended by physicians) How HRBs Create Value Health Record Bank including free/subsidized EHRs for physicians

15. HRB Business Model • Costs (with 1,000,000 subscribers) • Operations: $6/person/year • EHR incentives: $10/person/year • Revenue • Advertising: ~$3/person/year (option to opt out for small fee) • Reminders & Alerts: >= $18/person/year • “Peace of mind” alerts • Preventive care reminders • Other reminders • Queries: >$3/person/year • No need to assume/capture any healthcare cost savings (!!)

16. Pro Forma Example (Houston) Initial Capital: $4.4 MM Breakeven: 16 months EBITDA Year 4: $41 MM+ Month

17. Summary • Goal of Health IT: Comprehensive electronic patient records when/where needed • Current Efforts Not Working • EHR incentives not enough to ensure widespread adoption • HIEs cannot succeed on current path • Solution: Health Record Banks • Right architecture: central repository • Patients request and control records • Addresses EHR adoption, privacy, stakeholder cooperation, and sustainability • Investment opportunity

18. Thank You!Edward H. ShortliffeScholar in Residence, New York Academy of MedicineProfessor, Arizona State UniversityAdjunct Professor, Columbia and Cornell Universities ted@shortliffe.net