As the health care industry moves toward outcome-based, bundled payments, providers must increasingly leverage payment and clinical insights to better understand and manage medical risk. Most providers remain woefully ignorant of the economics relating to patient segments, service lines, geographies, and payers. To understand profitability at a detailed level in an outcome-focused world, providers must have access to and analyze normalized clinical, claims, and payments data.

To get there, several things must happen. First, electronic-health-record adoption and data standardization must continue. By applying CBO data, we estimate that 55 percent of hospitals and 85 percent of physician practices will reach the basic stages of meaningful use by 2014.

Second, the health information exchange (HIE) infrastructure must expand to provide connectivity. There are already 150 to 200 HIEs across the country, supported by a broad ecosystem of technology players, ranging from large-scale providers, such as Cerner, IBM, and Misys; to smaller ones, such as dbMotion and Medicity; to publicly backed approaches, such as the open-source software advanced by the Nationwide Health Information Network (NHIN). Larger hospital systems are also increasingly building out private HIEs that can help them better integrate care and manage their referral network, in some cases in collaboration with payers.

Finally, relevant clinical data will need to be integrated with claims information, charge data, and remittance information in a way that enables analytics on issues such as cost management, physician management, reimbursement optimization, and service line profitability. As with other transaction-processing and analytic capabilities in health care, developing these solutions will likely require innovative cross-industry collaborations involving some combination of intermediaries and infrastructure providers (payers, IT vendors, and financial institutions) and analytics service providers.