Establishing the business case for a regional health information organization (RHIO) is proving to be the biggest stumbling block for many of the communities where the data exchanges are starting up.

In the absence of government or foundation funding, the RHIOs must figure out how to become self-supporting.

"There's not enough solid data at this point" about the costs and benefits, said John Glaser, president of the eHealth Initiative and chief information officer of Partners Healthcare Systems based in Boston, at a press conference during the Connecting Communities for Better Health conference in Washington, D.C., last month.

Although grants and loans may be available to help a data exchange get started, a RHIO must be able to recoup its expenses over the long haul. In most cases, this probably means charging fees for its services. Who will pay such fees is not yet known.

During a pilot project involving electronic health records exchanged among three hospitals in Indianapolis, there was an average $27 reduction in costs per patient visit to the emergency room, said Dr. Marc Overhage, chief executive officer of the Indiana Health Information Exchange, one of the few RHIOs that is operational. "There are direct efficiency gains," Overhage added.

Most of the cost savings stem from reducing waste and duplication, studies indicate. But in some cases, unneeded tests can be a source of revenue for hospitals or physicians, so there is little incentive for them to eliminate the duplication.

Proponents of health information exchanges say they will improve the quality of care. It is not clear whether individuals, insurance companies, government agencies and others who pay medical bills will agree to pay more for quality care.

"Right now, too much of it is too hypothetical," Glaser said. "We need more scar tissue, frankly."

He and others at the conference said the pilot exchanges being financed by the federal government and some private organizations probably will clarify how advanced health care IT can be financed.