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A Business Plan Defines How Delivering Value Drives Sustainability in HIE

Executive Summary

Developing a business plan is a key activity when undertaking Health Information Exchange (HIE) projects. This management tool describes how one’s organization will meet objectives and discusses the key issues involved when building an HIE. Various stakeholder participation will be critical to sustaining these goals. 

Companion Article

A Guide to Planning a Health Information Exchange (HIE)

Engaging Stakeholders

It is important for the business model to have a mutually agreed upon exchange of value. A solid business plan must: (1) define the HIE in terms of the services that provide value to stakeholders and (2) develop a viable approach to delivering those services. One wants to be sure that you are clear on the value stakeholders will gain to increase and sustain engagement.  

Why Understanding Value is Important to HIE Sustainability

The value that the model delivers must be quantified for the stakeholders to recognize and appreciate. Three reasons why understanding value is important to an HIE include:

  1. You will understand what they will change their behaviour for
  2. You will understand what services your stakeholders may be willing to pay for
  3. It will help you determine and prioritize which services and the order in which your HIE should provide them

Understanding Stakeholders to Define Value

An in-depth understanding of your community is important for the type of governance that is right for the organization. Communication is key in the implementation of the HIE, by determining the fee structures that are appropriate for stakeholders. Speaking to stakeholders directly is important for getting their perspective and demonstrating the organization's commitment to active participation.

The Business Plan

The two key components of a business plan are, defining your services and developing your financial plan. This contains both project and operational activities.

Services

Business Plan Principles:

  • Principle 1: Treat the HIE as a business
  • Principle 2: Leverage high-cost, high-value assets.
  • Principle 3: Do not create loss leaders
  • Principle 4: Stay independent and locally sustainable
  • Principle 5: Look for areas where you can have a natural monopoly
  • Principle 6: Pay attention to the need for scale
  • Principle 7: Avoid grants for operational costs

 

Components of a Business Plan:

  1. Executive Summary
  2. Organization Description
  3. Services to be Provided
  4. Operations Plan
  5. Management Plan
  6. Financial Plan

Potential HIE Service Offerings

Commonly seen

  • Allergies list
  • Appointment scheduling
  • Claim status inquiry
  • Claims submission and response
  • Clinical documentation

 

Potential or Less Common

  • Clinical alerts to providers
  • Living wills
  • Credentialing information

 

*Please see Kolkman, L., & Brown, B. (2011) for a comprehensive list of service offerings.1

Financial Plan

This is a reflection and cost summary of the decisions you have made for the business which includes the pro forma budget that includes start-up costs, operational costs, and anticipated revenue.

Budget Categories

  • Building and equipment purchase or lease
  • Professional service
  • Staff salaries
  • Software product costs or licensing fees
  • Hosting/infrastructure
  • Internal staff training and expenses
  • Project team tools/software
  • Depreciation
  • Income/revenue

 

HIE Revenue Models and Sustainability

Long-term financial suitability is common to all HIEs, and the following are revenue models that help in achieving one’s financial plan.

Membership Model

  • Charge a set rate for organizations that want to participate in the exchange  
  • Advantage of this model is the predictability of the HIE’s revenue stream  
  • A drawback is that expectations may not be clear so compatibility should be determined

 

Transaction Fee Model

  • A commonly seen model, appealing to start-up companies
  • Participants pay a fee for transactions that utilize the HIE
  • Advantage is the small up-front financial risk for those wanting to try out the HIE
  • A drawback is that mature HIE find that participants may be more reluctant if charged for every transaction
  • Lack of long-term commitment leads to an unproductive revenue stream
  • Costs are too visible in mature HIE, hospitals may try to make cutbacks

 

Subscription Model

  • HIE packages its services into service offerings and provides them, individually or in packages, on a subscription basis
  • Seen in more mature HIEs
  • Advantage is managing the system is easily automated based on access allowed within the service
  • Another advantage is that participants are more inclined to increase their use of the HIE as the number of transactions does not affect fees
  • Provides a predictable revenue stream  
  • Must develop a service level agreement so all parties are aware of what is expected of each package

 

Tax-Based Model

  • Is when an area which levies a tax on every health insurance claims transition processed in the area
  • Revenue generated by that tax is then used to support the single area-wide HIE
  • An advantage is that is predictable revenue stream
  • May drive private sectors away
  • Must be sensitive to culture and norms of the region

 

Additional Revenue streams can be found on page 4 of the following document:

 

Related Resources 

 

References & External Links: 
  1. Kolkman, L., & Brown, B. (2011). The health information exchange formation guide: the authoritative guide for planning and forming an HIE in your state, region, or community. Chicago: HiMSS.
  2. Business Models and Value Proposition| HIMSS