Exploring Business Strategy in Health Information Exchange Organizations

Unlike consumer goods industries, healthcare has been slow to implement technolo gies that support exchange of data in patients' health records. This results in avoid able medication errors, avoidable hospital readmissions, unnecessary duplicate testing, and other inefficient or wasteful practices. Community-based regional health information exchange (HIE) organizations have evolved in response to federal aims to encourage interoperability, yet little is known about their strategic approach. We use the lens of institutional and strategic management theories to empirically explore the differences in business strategies deployed in HIEs that are, to date, financially sustainable versus those that are not. We developed a 20-question survey targeted to CEOs to assess HIE business strategies. Our sample consisted of 60 community-based exchanges distributed throughout the United States, and we achieved a 58% response rate. Questions centered on competitive strategy and financial sustainability. We relied on logistic regression methods to explore relationships between variables. Our regression identified characteristics common to sustainable organizations. We defined sustainability as revenues exceeding operational costs. Seventeen of the 35 organizations (49%) defined themselves as currently sustainable. Focus and cost leadership strategies were significantly associated with sustainability. Growth strate gies, which were much more common than other strategies, were not associated with sustainability. We saw little evidence of a differentiation strategy (i.e., the basis of competition whereby the attributes of a product or service are unmatched by rivals). Most CEOs had a relatively optimistic outlook, with 60% stating they were confident of surviving over the next 5 years; however, nearly 9% of the organizations were in some phase of divestiture or exit from the market. HIEs are evolving differently based on local leadership decisions, yet their strategic approach is isomorphic (or similar). Further insight into successful business strategies could help ensure the long-term survival of HIEs.