It's not surprising that California, home to Silicon Valley and Kaiser Permanente, leads the nation in the number of private physicians using electronic health records (EHRs). What is surprising is that its rate of adoption in 2008 was still only 37 percent. Changing that situation is the primary task of Jonah Frohlich, age 37.

As Deputy Secretary of Health Information Technology in the California Health and Human Services Agency, Frohlich is spearheading California's efforts to spread the use of EHRs, connect providers and improve coordination within state agencies. I recently called Frohlich (pictured below) to discuss the launch of California's health information exchange (HIE), Cal eConnect.

Let's talk about eConnect. What governance models did you consider? What were the pros and cons?

Jonah FrolichThe thing about government is that it's imperative to be very open and transparent. So with that principle, when we initiated our planning process, we wanted to ensure that we brought in as many stakeholders to our conversation as we possibly could to help build a consensus around how we govern the exchange. So we formed an advisory board, and we published the proceedings from those. And then we had these open workgroups in the strategic planning process. We had regular phone calls every month -- webinars that were open to the public where we sort of describe our plans and variety of options. Then we had town halls.

Through that process, we proposed a whole range of potential options around governance, all the way from, "Do we want this health information exchange to be managed exclusively by the state with some stakeholder input? Do we want it managed exclusively in the private sector? Or do we want something in-between, where there is sort of a joint responsibility of both the private and public sector?"

Through our public meetings, town halls and various discussions, there was really good consensus that it didn't fit with being solely a government function or solely a private-sector function. There needed to be enough oversight of state government to ensure that, for example, the needs of the underserved and vulnerable were met and to ensure that there was accountability at the state level. But we needed to make sure as well that there was buy-in and really active engagement of the community and the private sector. That's why we settled on a model that was nonprofit, that had both public and private constituencies on the governing board.

That's where it landed, and I think that it was the right decision. I know it's the right decision for California.

What advice would you have for officials in other states who are going into the kind of process that you are now coming out of (not that there isn't still a huge amount of work to be done)?

The most important thing is that you have an open process for making the decisions you are going to make. If it comes down from on high that this shall be the way that exchange is done in your state, I don't think that you would get the same kind of acceptance that you would if you did a great deal of outreach. Health information exchange is founded primarily on a basis of trust; it's a trust network. Participants don't trust what they don't build or if they are not involved in the decision-making. So you have to start with that.

The second thing is you have to know your landscape. You have to know what exists. You have to know what the priorities of the institutions are and what they need.

The third thing, based on those first two, is that you have to make decisions about what you are going to build and support, based on what ultimately is going to be purchased. So you've got to think, "What are people going to be willing to pay for?" The only way that you are going to be able to know that is by assessing what the market needs, what exists today and what the stakeholders want, what they would buy into.

Which segues nicely into my next question. California is getting nearly $39 million from the federal government to jumpstart its health exchange, which certainly seems like a lot of money -- until you start to think about it as a dollar per Californian. But is that really enough? What is the long-term financing model?

Right. I think the question is: What can it adequately be expected to do? What we can't do is get immediately to a ubiquitous health information exchange. We can't build that with $38 million. That's the price of putting in a medium-sized electronic health record system inside a medium-sized hospital. What you can do is build a foundation for how information can be exchanged -- a platform that allows for secure messages to be delivered between the constituents.

That's what we are planning on doing: First is you build this foundation, which includes essentially a routing service and a trust framework. We have what we call a certificate authority, where legal organizations can have a digital certificate, whether it is a health plan, hospital, provider, pharmacy or lab. This network would allow these entities that each have digital certificates to verify -- essentially authenticate --to each other that they are completely authorized to exchange certain kinds of data.

Then use the directory like the yellow pages to route the messages to the appropriate provider to send the message. So we believe we can build that platform. Then it's kind of like the iPad. On top of that, you can start to build applications. You can build personal health record extraction tools or data translation tools or other kinds of functions. So we think that based on our assessment of the landscape and our discussions with various folks, hospitals want to be able to connect to a network. They would be willing to pay for it if they can actually deliver and receive messages.

California has had some bad experiences with regional health exchanges in the past; I'm thinking of the California HealthCare Foundation's experiences in Santa Barbara. Is that something you've tried to learn from?

Oh, yes. One is you need to be very careful about what we call the big bang approach, which is trying to light up an entire community with everything -- with all HIE transactions all at once.

We prefer an approach that we call radical incrementalism, where we define the path toward having real, robust exchange of all kinds of data, but you start with the simplest things first. You start with lab results. You get those working, and you get the clinicians to use those tools for electronic exchange, then you add one more functionality that is of value.

The second thing is really focusing on the value proposition, and ensure that you engage with the constituencies, understand what their priorities and needs are, and focus on those first. That should help drive the value equation and the sustainability, which is the third thing.

You should not be building something where you do not have a sustainability model firmly understood. So you need to have that articulated at a fairly early stage of the process and a way of sustaining your exchange infrastructure.

So think incrementally. Think about value, and make sure you think about exchange sustainability.

When will you know if Cal eConnect is working?

I think we'll know whether we're on the right path by the summer of 2011 or if we need course correction. But we should have a good sense at that point of: Have we built the right set of services? Are they usable? And do customers want to pay for them?

What are the benefits if you get this right?

The first is improving access to clinical information, which should lead to better treatment decisions, which ultimately should result in patients receiving the right care. Not necessarily more care, but the right care, which in the long term should result in decreases in costs and ending the cost curve.

That's a longer-term proposition. What we might find in the short term is by getting better information to providers and having them look more across their panels at their populations and seeing that a lot of their diabetes patients aren't getting testing as regularly as they should, then you may actually see some increases in costs due to an increase in testing or increases in encounters. You may get some decreases associated with reductions in duplicate tests. I don't know if they'll offset each other in the short term.

What are the things that worry you most moving forward?

Some of the issues I am most concerned about are actually around privacy and security. I think it's one of the 800-pound gorillas in the room. There might be a couple of them, but that's one of them.

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