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Computerworld - Hampered by development woes, privacy concerns and funding obstacles, one of the country’s oldest regional health information organizations (RHIO) has quietly shut down.

The Santa Barbara County Care Data Exchange, launched in 1999 to facilitate the exchange of medical data among physicians, hospitals and other health care organizations in Santa Barbara County, Calif., closed late last year after dealing with myriad policy and technical challenges.

Its ultimate demise can be traced to a “fatigue” that set in among potential members waiting for work to be completed, said Sam Karp, chief program officer at the California HealthCare Foundation, an Oakland-based health care research and philanthropic organization that funded the RHIO.

Failed RHIO

Santa Barbara County Care Data Exchange: •  The initial proposal for the exchange was made by David Brailer, who later became the Bush administrations first health IT point man. •  It was formed in 1998. •  The exchanges first pilot project began in 2005. •  By mid-2006, only two of the seven health care providers originally targeted by the exchange had begun to supply it with data. •  The peer-to-peer system developed by the RHIO will be donated to the open-source community.

The foundation invested $10million in the project in 1999, but by late last year, only two of seven health care operations that were expected to participate had started sharing data, Karp said.

“The foundation’s view is that the project died more from the weight of its design than from any of the individual problems it encountered,” Karp said.

He contended that the group erred in opting to try to build all of the infrastructure at once instead of taking an incremental approach.

“Had we started with the simple exchange of lab and pharmacy data as opposed to building a system that could transmit not only all clinical information among providers but also make that information available to consumers, we would have been more successful,” Karp said.

The RHIO also faced concerns from potential customers about whether it could adequately protect the privacy of patient data flowing through the system — a problem that has proved thorny for health care data exchanges nationwide, Karp said.

The security fears persisted even after a third-party security firm the RHIO hired was unsuccessful in hacking into the peer-to-peer data-exchange system, he noted. “Some of the organizations had serious concerns about their liability for privacy breaches,” Karp said.

The potential members also balked at helping to fund the system, even after the first two participating organizations — Cottage Health System and the Santa Barbara Regional Health Authority — began exchanging data last year.

At the same time, several area hospitals had set up their own electronic feeds, limiting the need for the RHIO, Karp explained.

“By the end,” he said, “the value proposition of the exchange, given the cost to operate it, wasn’t there for the providers.”

The demise of the organization proves that such efforts require a sustainable business model, said Bruce Fried, a health care attorney at Washington-based Sonnenschein Nath & Rosenthal LLP.

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