Funding, Technical Woes Shut Down Longtime RHIO

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 between physicians, hospitals and other health care organizations in Santa Barbara County, Calif., closed late last year after dealing with myriad policy and technical challenges.

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

The foundation invested $10 million in the project in 1999, but by late last year only two of seven health care operations 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 suggested.

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 proven thorny for health care data exchanges nationwide, Karp said.

The security fears persisted even after  a third party security firm hired by the RHIO 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 added.

The potential members also balked at helping to fund the system, even after the first two 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 said.

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

Bruce Fried, a health care attorney with Washington, D.C.-based Sonnenschein Nath & Rosenthal who worked for the Santa Barbara RHIO on privacy issues, said that the demise of the organization proves that such efforts require a sustainable business model.

“Unless we begin to see dozens of successful models fairly soon then we will see frustration, exasperation and ultimately people throwing up their hands and saying they have better things to do,” Fried said.

In addition, Fried said the “huge stumbling block” of determining liability for transporting inaccurate or incomplete data that results in an injury or death has yet to be resolved. Until that happens, the concept will continue to move slowly, he said.