Electronic Health Records

Policy & Regulation News

How Does Competition Impact Healthcare Interoperability?

By Kyle Murphy, PhD

- The Federal Trade Commission has weighed in on the nationwide interoperability roadmap drafted by the Office of the National Coordinator for Health Information Technology (ONC) and identified aspects of the plan that could have a negative impact on competition.

In a letter to National Coordinator Karen DeSalvo, MD, MPH, MSc, the FTC highlights three areas that the ONC should consider carefully moving forward so far as each could create an unfair marketplace that hinders rather than promotes competition among healthcare providers and health IT vendors: regulation, governance, and technical standards.

The federal agency proposes that the ONC considers whether the economic interests of providers and vendors align with the goals for achieving interoperability and may have already contributed to delays in the adoption of interoperable health IT systems.

Overcoming fragmentation is another focal point the FTC is asking the ONC to consider carefully. "ONC should anticipate any such difficulty, along with other potential challenges such as motivating providers to overcome short-term costs in order to realize the long-term benefits of interoperability, as it implements its plan," the letter states.

According to the FTC, the ONC should leverage the federal government's influence as a major payer "to make an effort to align economic incentives to create greater provider demand for interoperable health IT, thereby incentivizing health IT vendors to compete on the basis of interoperability."

Another area that could pose potential problems for the ONC realizing its plans for interoperability is shared governance, the FTC claims:

As ONC implements this Roadmap goal, it may wish to consider taking steps to ensure that coordinated governance by market participants does not unduly distort competition. In prior study, enforcement, and advocacy, the FTC has observed that, when market forces are replaced by coordinated action between market participants, competition may be suppressed. In extreme cases, this coordination may be used by market participants to exclude new products or competitors.

Lastly, the FTC is recommending that the ONC look into how the development and implementation of health IT standards can work against the end-goal of realizing a learning health system by leading to "unintended consequences." Although the federal agency actively supports the use of standards in other industries beyond healthcare, it makes clear that standards can limit competition between technologies and standards, lead to lock in, and present challenge when selecting standards.

"Industries with standardized platforms frequently exhibit substantial network effects—that is, the value of the platform tends to rise as more consumers adopt the standard," FTC leadership explains. "These industries also can be marked by high switching costs for consumers who switch to alternative platforms."

What's more, standards can become a mechanism for preventing new products and competitors attempting to enter the fray, the FTC observes.

In addition to the three aspects identified by the FTC, the federal agency also commends the ONC for emphasizing the importance of health data privacy and security in the interoperability roadmap. "FTC staff looks forward to working with ONC as it continues to develop these and other protections for the privacy and security of consumer data, both in and out of traditional health care settings."

The healthcare industry already faces competition challenges in the form of provider consolidation and safe harbors for sharing health IT and interoperability appears slated to join the list of concerns for industry stakeholders working to achieve the triple aim.