The Kansas Health Information Exchange will dissolve itself and hand over operations to the state’s health department after a long stakeholder debate about the costs of the public-private HIE, and its regulatory role, in a state with a growing provider-based HIE network.

The Kansas Health Information Exchange (KHIE) board voted last week to transfer its operations to the Kansas Department of Health and Environment by October 2013, when federal grant funding is set to expire. The plan still needs to be approved by the state legislature.

Cost was apparently the largest factor behind the decision. Staffing KHIE as an independent body was estimated to cost $400,000 a year, and the board was considering charging fees from providers or HIEs. Shifting KHIE’s regulatory operations to the state would cost about $54,000, state officials have estimated.

"This is a way to get the state to have some skin in the game,” KHIE board member Jerry Slaughter, who’s also executive director of the Kansas Medical Society, said at last week’s meeting, as the Kansas Health Institute’s News Service first reported. “Right now the only people who have skin in the game are providers." (Slaughter, also the chair of the Kansas Health Information Network, recused himself from the vote to disband KHIE.)

A few observers and stakeholders at the meeting opposed the move. "The future is the ability to take this data and really start improving the science of medicine and identifying the most effective interventions,” Martie Ross, a consultant who has worked for KHIE's legal contractors, Spencer Fane Britt & Browne, said at the meeting, the Kansas Health Institute’s News Service reported. “It's all opportunity out there, and to flush that away [to save] staffing costs I think is short-sighted."

Created in 2010, KHIE evolved from an HIE commission created by then-governor and current U.S. Health and Human Services secretary Kathleen Sebelius. Initially intended to be an HIE, it eventually sought to be more of a regulator, as health systems started building their own infrastructure and connecting to the Kansas Health Information Network, a statewide HIE built with private funding by the Kansas Hospital Association and the Kansas Medical Society.

KHIE’s public-private nature has at times been controversial, and the effort to scale back what some might consider a bureaucracy comes as Republican Governor Sam Brownback’s administration is trying to scale back the role of government in other areas, like transitioning almost all of the state’s Medicaid recpients into managed care organizations.

It’s not entirely clear what will happen to the remainder of the roughly $9 million KHIE received from the Office of the National Coordinator.

“We would like to have some of the stimulus funds," Laura McCrary, executive director of the Kansas Health Information Network, told Government Health IT in August.

"There’s about $5 million left, and we’re hopeful we’ll get a portion of that," McCrary said. "It’d be great to have a bridge fund" for exchange infrastructure in the works.