With states either submitting or receiving approval from the Office of the National Coordinator for Health IT of their strategic and operational plans for statewide HIEs, the HIE market is booming for vendors.

After a slow start, the HIE marketplace is continuing to evolve at a faster pace than ever before, said Glenn Keet, president of Axolotl (which it was announced on Aug. 16 will be acquired by Ingenix).

From 1995 to 2004 the market for regional health information organizations was almost nonexistent, Keet said. Market awareness emerged between 2004 and 2008, thanks to David Brailer, MD, ONC's first leader, and some market incentives. It wasn't until the American Recovery and Reinvestment Act of 2009 and its HITECH Act that the market dynamics changed dramatically.

"In 2009, when ARRA funding became available, it drastically changed the market dynamics because the increase in funding increased the market for healthcare IT substantially at a time when other industries such as the financial markets are flailing," Keet said. "As a result, there are many, many new entrants to the HIE market that range from new start-ups to large sized companies. Again, the market has become extremely fragmented."
Keet noted that the market will continue to evolve as standards are defined and as new entrants continue to stream in.

"The end goal is still a fast-moving target," he said. "As a result, it is natural to see consolidation and more partnering in the marketplace."

Market expected to expand before it consolidates

"The HIE segment is growing so fast," agreed Lorraine Fernandes, vice president and healthcare industry ambassador for Initiate Systems.

Thanks to the federal funding of statewide HIEs, the market will continue to expand before it consolidates, she said, which she expects will occur about a year from now. Fernandes said the focus has shifted to how data can be exchanged among providers to serve the local community and to deliver continuum of care.

Push for vendor partnerships

Medicity's clients include some 700 hospitals under the enterprise or private HIE model, said CEO Kipp Lassetter. "There's a big push for most hospitals to establish HIE networks," he said. These enterprise HIEs can be complementary to what states are doing. In fact, they can be leveraged and used as building blocks, so long as they are compatible or can be made compatible, he said.

Medicity had been working with the states of Delaware and Mississippi long before ARRA was enacted. The introduction of the funds forced early-adopting states to shift their strategy in terms of how to approach state-level HIE, Lassetter said. Now a lot of attention is being redirected to state-level efforts.

One thing Fernandes is seeing among state RFI and RFPs for statewide HIEs is a "cry" for vendor partnerships. Expect to see a continuation of the trend of multiple vendors delivering components of an HIE infrastructure continuing, she said.

Larger operational HIEs have traditionally worked with multiple vendors.

One of dbMotion's basic tenets of operation is to "partner wisely," said president Peter McClennen. The company chose its closest partners based on a shared vision of its Connected Healthcare. Thus far, dbMotion has formed relationships with thought leaders such as CAP STS (the keepers of SNOMED CT), Allscripts, Google Health, Initiate Systems, IBM and Research in Motion (BlackBerry). "We find that with our partners and clients, this close alignment leads to accelerated learning cycles and, ultimately, increased value," he said.

"Right now  and as far as I can see into the future  it's all about innovation and customer success," McClennen said. "There is still a long runway for innovation and true customer success before we see the typical consolidation phase. We are just scratching the surface as an industry in connected healthcare."