Sustainability Planning for Healthcare Information Exchanges with Supplier Discount Program

The Healthcare Information Exchanges (HIEs) facilitate the electronic transfer of health information among healthcare organizations. Several studies have shown that the HIEs have potential of saving billions of dollars per year and significantly improving healthcare delivery. In spite of that, only a few HIEs are operational, and even fewer have advance exchange capabilities. A key obstacle in the growth of HIEs is considered to be their financial sustainability. In spite of its importance, the issues of HIE sustainability have not been analyzed rigorously. Hence, the focus of our work is to understand the operational decisions of an HIE, and provide insights on making good'' decisions to ensure its long term financial sustainability. Some recent studies argue that the HIEs need to provide additional services in order to improve financial sustainability. In this direction, some HIEs have started partnering with external suppliers for the supplier discount program where each member receives a fixed rebate for each dollar spent via the network. Our model is developed for one such HIE based in Austin, Texas (Critical Connection). Although we present our model in the context of Critical Connection, we ensure that our model is generic enough to apply in other HIE settings as well. We investigate a two-period two-service model where an HIE offers (i) healthcare information sharing service, and (ii) supplier discount program. Our proposed model is primarily based on our interactions with a number of HIE providers in Texas. First, we present structural properties and equilibrium solution for our model. Then, based on extensive computational experiments, we present several useful insights for the HIE provider as well as the policy-makers.