Brailer Insists RHIOs Remain Important

SAN FRANCISCO The recent failure of several high-profile regional health information organizations (RHIOs) is not dampening the enthusiasm of the one-time champion of the RHIO, former national health-IT coordinator David Brailer.

“I think RHIOs are shaking out. No surprise,” Brailer said in an interview last week. “I think there’s a shakeout happening in health-IT quite broadly.”

Says Brailer, “I’ve viewed RHIOs essentially from the government as a political movement,” an effort to change health care from the bottom up. “It represented a visible statement of people not relying on Washington to tell them what to do. It represented an idea that health information is a broadly and profoundly decentralizing force, a democratizing force in health care.”

He says that RHIOs also stand for an “uprising” by people within communities who want to improve health care. “Health care change is about persistence. RHIOs are about persistence, and I don’t think they’re about a short-term win.”

Likewise, Brailer is not surprised that so many RHIOs are having difficulty finding a sustainable model including the one he helped start, the Santa Barbara County (Calif.) Care Data Exchange, which went under late last year.

“When you’re in an industry that penalizes efficiency and penalizes quality, if your primary purpose is efficiency and quality, it’s hard to create a business model,” Brailer says.

However, he remains bullish on health information exchange as a force for progress. “The very presence of RHIOs makes it more likely that positive change will happen, and that change will help RHIOs be sustained,” Brailer says.

“Keep trying, because these are moving in the right direction, and people don’t understand how close they are to tipping over some of these status-quo forces that have kept us from making progress,” he advises.

Though he left his job as national coordinator in May 2006 and cut his last government ties in May 2007 when he stepped down as co-chair of the American Health Information Community in May 2007, Brailer has remained attuned to happenings in health-IT, in part because of his new job. He now heads Health Evolution Partners, a private-equity firm that is managing $700 million in capital from the California Public Employees Retirement System, or CalPERS. (See “Brailer Leads New Venture Capital Firm.”)

Brailer recently went public with his investment strategy, saying that $500 million of the money will go toward late-stage startups and growth companies, $10 million to $80 million at a time. With the remaining $200 million, Health Evolution Partners will partner with other investors to support early-stage ventures. “We’re not going to do early-stage companies directly,” Brailer says.

“The opportunities and the sweet spot in health care investing right now is in these early-growth-stage companies, companies that are past proof-of-concept,” according to Brailer. “They need financial capital. They also need a lot of know-how. We bring both of them.”

He appeared last week at a San Francisco conference on user-generated technologies collectively known as “health 2.0,” where a good number of start-ups were chasing some of those millions. (See Inaugural Health 2.0 Conference is Harbinger of More to Come.”)

Brailer won’t be making direct investments in health 2.0 companies right away, since most are early-stage ventures. “I’m here to really get a sense about which venture partners we should work with in this space, what the companies are, because we will be doing things here, but, again, through partners, not directly,” he says.

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