State SenatorJack Hatch (D-Des Moines) has been the lead sponsor for every health care reform legislation in Iowa for the past five years from his perch as the chair of the state senate’s Human Services Budget Subcommittee. His crowning achievement in the arena is the recently passed HF 649, which authorizes the creation of a statewide health information exchange.

Jack Hatch is nervous. “There are so many unknowns going forward in terms of creating a financially sustainable system and wondering what regulations are going to be coming down from the federal level. Everyone is worried that we’re going to get into this and then be on the hook for more investment than we ever anticipated.”

The state has been putting the building blocks in place via federal grants and state funding. Iowa Health System, the largest provider network in the state, bought a statewide fiber-optic network from a defunct cable company and linked in its 25 hospitals, 140 clinics and employed and affiliated physicians to the backbone. The Iowa Hospital Association took care of the rest of Iowa’s provider community by offering connections, and the state now potentially has 100 percent physician coverage, Hatch says, though some providers still need help funding the “last-mile” connections to the fiber-optic network. Two Federal Communications Commission grants totaling $24 million to the health system and association were used to get the HIE backbone operational.

With the technology infrastructure in place, the state government moved onto the governance and finance structure. House File 649, passed in mid-July, calls for a Health Information Technology Council to develop the business model and financial stability plan for the state health information exchange. The council comprises the director of public health, a state Medicaid official, representatives from hospitals and licensed physicians, representatives from health insurers, and a business entrepreneur selected by the governor. The council is in charge of administering an $8.35 million stimulus-funded grant from the Department of Health and Human Services to create the HIE.

And now comes the hard part. “Everyone trying to minimize their financial risks—the state, health insurers, hospitals, physicians—because of the unknowns,” Hatch says. “But if the private sector thinks they’re not going to pay for it, they’re dead wrong. We are going to build it, but the private sector is going to pay for it.

“The state through this legislation has made a significant obligation to get this done, but we’re holding back on financial obligations until we know more. The council was created to ensure that everyone doesn’t try to pass on their costs and that the network doesn’t become a profit center for some entities hooked into the network.”

Hatch foresees the state HIE sustaining itself via fees from participants, which will go into a state electronic health finance fund. Written into HF 649 is the development of strategies by the Health Information Technology Council to avoid the use of general fund appropriations to sustain the network, and a plan to transition operational and governance of the exchange to a non-governmental entity.

The council is required to submit its business model and financial sustainability plan to the governor no later than December 1.

“There are a lot of unknowns, but we’re trying to be methodical as we move forward so we can identify the serious financial risks and address those. Everyone’s been happy to date to sip from the public trough, and the state is more than happy to support the business of medicine, but the state is in no position to finance this network by itself,” Hatch says. “The health care industry gets significant benefits from information exchange, and my read on the situation is that any physician who doesn’t think they need to adopt health I.T. is fooling themselves.”

For a snapshot of the industry's progress with health information exchanges, click here for a slideshow on the eHealth Initiative's recent HIE report.



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