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Reducing Medicare Spending Through Electronic Health Information Exchange [PODCAST]

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The Hospital Finance Podcast

In this episode, Dr. Idris Adjerid, Assistant Professor at the Mendoza College of Business at Notre Dame, discusses the results of a recent study which examined the impact of health information exchanges (HIEs) on Medicare spending.
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Mike Passanante:  Hi! This is Mike Passanante. And welcome back to the Hospital Finance Podcast.

Today, I’m joined by Dr. Adjerid Adjerid who is an assistant professor in the Department of IT, Analytics and Operations at the Mendoza College of Business at Notre Dame. His research focuses on the economics of information systems and personal information, and includes application of behavioral economics to privacy decision-making, and the impact of health information technology on patient outcomes and healthcare costs.

Dr. Adjerid has joined us today to discuss the results of his upcoming article in Information Systems Research entitled Reducing Medicare Spending through Electronic Health Information Exchange: The Role of Incentives & Exchange Maturity.

Dr. Adjerid, welcome to the program.

Dr. Idris  Adjerid:  Thank you for having me. I’m very happy to be here.

Mike: So, first, can you give us a quick background on health information exchanges?

Dr. Adjerid: So, health information exchanges are these organizations that have been around for a while now. And their main focus is to help providers, hospitals and so on to more seamlessly share information.

There’s a broad consensus that, when you’re treating patients, having the most comprehensive information you can have is going to help you treat them better and more efficiently.

So, the current state of affairs on a lot of areas is that it’s fairly difficult to exchange information between unaffiliated hospitals in a seamless, kind of real-time fashion that would be necessary to really actually help the provision of care.

So, that’s what HIE’s do. They just basically provide a technology platform that allows these different hospitals to talk to each other more easily. And they also provide a degree of governance around how different hospitals use other hospitals’ information and so on. So, it’s a combination of things.

Mike: Great! Thanks for that background. Let’s turn to your study then. Can you tell us why the study was initiated and what you were trying to find out?

Dr. Adjerid: So, I actually got interested in the idea of health information exchange when I was working at the Government Accountability Office in Washington DC. I was working on some of the privacy issues around health information exchanges early on. And I actually ended up working on a paper that was also published looking at the effect of privacy regulation on health information exchange development and so on. But that was really kind of the cost side of the equation, what are the risks with HIE’s.

Myself and my co-authors, Corey Angst and Julia Adler-Milstein, realized that there’s still a pretty significant question around the benefits of HIE’s.

I think there are a lot of folks who expected HIE’s to have these pretty broad benefits, whether it be the quality or reduced spending. But a lot of the studies that were out there that looked at those kinds of things, they tended to be fairly regional, kind of small scale. So, they could only speak to certain regions.

And we thought that a study that could look at a national landscape and try to evaluate the effect of HIE’s on these important outcomes—in our case, spending—we thought could add a lot of value to the debate and reduce some of the uncertainty around this idea of health information exchange and the value that it could provide.

Mike: And indeed, you did find that, in some circumstances, there were spending reductions as a result of HIE’s. And you found that in a couple of very specific circumstances, the reductions were greater. Could you tell us about those?

Dr. Adjerid: Sure, yeah. So, we found two important things that really modified the benefit from exchange in terms of cost reduction. And the first one was the nature of the financial incentives in a particular market.

So, actually, the way we did our analysis, we looked at across the US, these different healthcare markets, we just basically, kind of in simplest terms, compared spending in markets with HIE’s against markets that didn’t have HIE’s and looked at the differences. First, we kind of coupled the data we had with various models trying to figure this out. But ultimately, in simplest terms, that’s what we did.

But we also found that when we looked at markets that had patients that were covered by reimbursement or payment plans or insurers, that really incentivized spending reduction. That’s where HIE’s had the most benefit.

So, basically, in layman terms, where hospitals shared some of the benefits financially from reduced spending those were the regions where HIE really had a strong effect. So that was one thing we found.

And then, the second thing we found was that maturity was a major factor, so how long the HIE had been in place. This actually makes a lot of sense. If you think about health information exchanges, it certainly takes some time to get up and running. And at the same time, it takes time to build up this critical mass of patient information. But as more providers jump on, the more data is available the more likely you are to create this value.

And the other dimension around maturity is that it’s not trivial to work in health information exchanges into clinical kind of workflows. So, as a provider, as a hospital, even if you have access to an HIE, it takes quite a bit of time to acclimate to that new information to make sure that the staff are using it in a way that’s meaningful and that’s going to create value.

So, that’s the other piece of it. On one side of the equation, there was kind of some financial sharing of benefit from spending reductions. And the other piece was just giving the HIE time to develop and giving providers time to work the HIE’s information into their workflows.

Mike: And given the reductions noted in the study, I think in the information that I read, you mentioned that some organizations or people are still lukewarm about HIE’s. Why do you think that is?

Dr. Adjerid: I think HIE’s have evolved a lot in the last two decades or so in terms of the models, financial sustainability, the way that governance is being done. So I think there’s been a lot of trial, and in some cases, errors that’s kind of softened or made the enthusiasm lukewarm. So, I think that’s part of the equation.

But actually, that’s really what motivated our study. I think part of the challenge is that even though there were these very large promised gains, there weren’t many studies out there that really tried to quantify and identify these gains using national data and using it in a very robust analysis and so on.

So, we thought that was part of the equation. Part of what was missing was that you’re asking hospitals, healthcare leaders to invest quite a bit of time and money into these exchanges. By the way, that’s with the help of also a lot of federal and state incentives, so taxpayer money as well. And there’s a lot of immediate benefit that’s very obvious. So, I think that that was challenging.

So, basically, we’re hoping that our study does impact that discussion. And the way that we share information between hospitals is likely to evolve. I don’t think we’re really kind of advocating any particular model of information exchange. There might be more innovative ways, different ways to do it moving forward. But we do think that the study shows that the idea of information exchange really can be quite valuable if implemented nationally.

Mike: Agreed! And to that point, would you mind outlining for us what you feel are some of the best circumstances where HIE’s can succeed?

Dr. Adjerid: One of the main takeaways really is that, as you know, there’s quite a bit of debate currently and iteration currently thinking about designing payment models in ways that incentivize high quality care that’s cost-effective. And I think HIE’s are kind of part of that narrative—HIE’s and maybe technology in healthcare more generally.

As you probably know, technology adoption and investments in healthcare are kind of a key part of the strategy for curbing costs. But at the same time, it’s difficult to expect providers to invest heavily in technologies where they don’t see any kind of financial benefit or are able to recoup any of those costs.

So, I think the incentives are going to be key in terms of creating an environment where HIE’s really create the promised value.

And going back to what we said before, maybe a little bit of patience. Depending on the way these models develop and so on, it’s going to take time for these things to show some of their value.

Those are the two things that we can say from our study in terms of the kind of conditions that hopefully can lead to more value.

Mike: And your study is due to publish in Information Systems research. When is that due to publish?

Dr. Adjerid:  We don’t know. We don’t have an exact date, but in the next few months. It is available through public repository online. So if you search it, you can find it on SSRN which is a public repository, so to speak, and read it there. It should be in print in Information Systems Research in the next few months.

Mike:  That’s great! And if people want to find out more about you or get in touch with you, what’s the best way to do that?

Dr. Adjerid: The best way to do that is through my website. I have my email on there. That’s the easiest way to get in touch with me. I’m pretty responsive to that. I’m happy to talk to people who want to talk about this work.

Mike:  Well, that’s great! Dr. Adjerid, thanks so much for joining us today on the Hospital Finance Podcast and sharing the results of your recent study around HIE’s.

Dr. Adjerid: Thank you for having me.

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