Wednesday, September 26, 2007

RHIOs are still relevant according to Dr Brailer

Neil Versel, who is also a fellow health IT blogger listed on HITSphere, just wrote an article, for Digital HealthCare & Productivity: "Brailer Insists RHIOs Remain Important".
Dr Brailer still remains bullish on the prospects of RHIOs. He admits that RHIOs are undergoing a shakedown. I also believe this is the case.

Take the dot-com boom as an example. The initial exuberance was followed by people questioning whether the Internet could actually produce a sustainable business model. Well, since then we have seen the likes of,,, and the list keeps growing.

RHIOs too, I believe will follow a similar path. Just as with the dot-coms, when funding was abundant, there was a "spend-spend" mentality without regards to sustainability. RHIOs, like the dot-coms, had been flush with significant funding, mainly from state and federal grants. In fact, there is a term for these grant-dependent entities: "Beltway bandits – a group of people who live off government grants", "grant babies" (see HISTalk)

The Santa Barbara RHIO is a good example, where it did not take long to burn through $10M in funding, only to learn in the end, that there really did not seem to be a need for such an entity in their community. Just recently, we learned of the shutting down of the Oregon RHIO, which did so only after spending nearly $500K just to find out that their RHIO was going to be to expensive.

Once you start hiring those consultants and lawyers, and start setting up committees, money can dry up very fast. RHIOs need to evolve, I believe from an entrepreneurial model that enabled the small technology start-ups in the 80s and 90's to beat the larger companies. After all, it was this model that allowed IBM to develop the now famous IBM Personal Computer (IBM-PC). IBM, in the early 80s, after learning from the success of Apple Computer, used a "small start-up company" model to develop the IBM-PC.

RHIOs will start to succeed once they focus on sustainable models that meet true business needs rather than needs decided by committees. They will need to adopt a "start-up" model, depend less on government funding (handouts), and rely more on self-funding and private investments.

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