Module 1	Introduction	Unit 1 IIS Sustainability Toolkit Introduction
Module 2	Getting Started	Unit 1 How to Use this Toolkit
Module 3	Defining IIS Sustainability	Unit 1 What is IIS Sustainability and Why Does it Matter?
Module 4	Strategy 1: Diversifying Funding	Unit 1 Diversifying Funding Introduction	Unit 2 Approach A. Leveraging Medicaid Match	Unit 3 Approach B. Billing for IIS Data
Module 5	Strategy 2: Optimizing IIS Efficiency	Unit 1 Optimizing IIS Efficiency Introduction	Unit 2 Approach A. Increasing the Use of Shared Services	Unit 3 Approach B: Leveraging Shared Infrastructure	Unit 4 Approach C: Using Open Source Software	Unit 5 Approach D. Implementing Process Automation	Unit 6 Approach E: Modernizing IIS
Module 6	Success Stories from the Field	Unit 1 Success Stories Introduction	Unit 2 Using Medicaid Match to Diversify IIS Funding	Unit 3 Diversifying IIS Funding Through Health Plan Billing	Unit 4 Slowing the Curve to Manage Rising IIS Costs
Module 7	Additional Considerations	Unit 1 Additional Considerations
Module 8	Additional Resources Related to Sustainability	Unit 1 Additional Resources
Module 9	References	Unit 1 References
Module 10	Abbreviations and Acronyms	Unit 1 Abbreviations and Acronyms

Success Stories from the Field

Slowing the curve to manage rising IIS costs

Tennessee Department of Health

At a Glance

Challenge: Rising operational costs, vendor constraints, and significant staffing reductions required the Tennessee Department of Health (TN DoH) to rethink how it manages IIS operations and expenses.

Approach: The TN DoH focused on improving cost transparency, restructuring vendor contracts, adopting lower-cost tools, leveraging shared enterprise services, and shifting selected functions to reduce administrative burden.

Key insight: Rather than dramatically lowering total costs, Tennessee emphasized slowing cost growth and improving efficiency through strategic operational changes.

Key takeaway: Even when direct cost reductions are difficult, jurisdictions can improve IIS sustainability by increasing transparency, adopting shared services, and replacing high-cost tools with flexible alternatives.

Public health challenge

Like many jurisdictions, Tennessee faced steadily increasing IIS operational costs driven by vendor pricing structures, enterprise IT charges, and evolving system requirements. Vendor contracts based on bundled pricing limited visibility into specific cost drivers, making it difficult to optimize spending or scale services appropriately.

At the same time, the program experienced a 53% reduction in staff, creating significant pressure to maintain operations with fewer resources. This forced leadership to prioritize efficiency and reassess workflows, tools, and vendor relationships.

Rather than pursuing cost reductions alone, Tennessee focused on mitigating future cost increases and maximizing the value of existing resources.

Approach

To address rising costs and operational constraints, TN DoH implemented a set of targeted strategies focused on increasing transparency, improving efficiency, and leveraging lower-cost alternatives. The approaches below reflect practical steps taken to manage expenses while maintaining system performance.

Increasing vendor cost transparency

Tennessee restructured elements of its IIS vendor contract to move away from bundled pricing toward more granular, deliverable-based payments, particularly for system modernization and enhancement work. By tying payments to documented milestones and deliverables, the state increased accountability and gained better insight into specific project-related costs.

However, achieving similar transparency for ongoing operations and maintenance (O&M) costs has been more challenging. While some visibility into cost drivers (e.g., cloud hosting and message volume) has improved, obtaining detailed breakdowns of monthly O&M expenses remains difficult. Despite these limitations, the shift toward more granular contracting for enhancements represents an important step toward improving cost visibility and managing vendor performance over time.

We focused less on cutting costs outright and more on slowing how fast they were growing.

Managing message volume and vendor charges

The TN DoH team began analyzing high-volume data exchanges, particularly from large trading partners, to identify opportunities to reduce unnecessary message traffic and control costs tied to HL7 volume-based pricing. This approach focuses on identifying major cost drivers and targeting interventions where they can have the greatest financial impact.

Replacing high-cost tools with lower-cost alternatives

When enterprise licensing costs for a help desk platform increased dramatically, Tennessee replaced parts of the system with an internally managed solution using REDCap software made available at no cost to the jurisdictions through CDC. This shift:

Eliminated significant licensing costs
Allowed customization to fit program needs
Reduced documentation burden for staff handling support requests

While some workflow trade-offs occurred, the overall transition improved affordability and flexibility.

Switching to a tool we already had access to gave us flexibility and immediate savings.

Leveraging shared enterprise services

Tennessee expanded its use of shared services, including participation in an enterprise data lake supported by the agency’s centralized IT and analytics teams. By using and contributing funds to shared infrastructure rather than building program-specific systems, the IIS program benefited from:

Shared hosting and analytics capabilities
Centralized governance and support
Improved data quality and interoperability opportunities

These shared investments helped avoid future standalone infrastructure costs.

Streamlining operations and shifting workloads

To manage staffing constraints, the TN DoH explored shifting certain resource-intensive functions, such as data reporting, to vendors or shared partners when feasible. The program also began exploring automation opportunities and national tools to reduce manual processes over time. While not all automation efforts are fully implemented, these steps reflect a longer-term strategy to improve operational efficiency.

Key takeaways

Efficiency can be as important as cost reduction. Slowing cost growth is a meaningful sustainability strategy.
Contract structure matters. Increasing transparency and tying payments to deliverables can improve vendor accountability and avoid paying for services not delivered.
CDC-provided software and internal tools can reduce reliance on expensive proprietary platforms. Using alternatives like REDCap can deliver both savings and flexibility.
Shared infrastructure and services reduce duplication. Enterprise data platforms and centralized analytics can offset the need for program-specific infrastructure.
Focus on major cost drivers. Monitoring and managing message volume and high-use partners can help reduce variable costs.
Operational resilience is critical. Efficiency strategies are especially important during workforce transitions.

Why it matters

Tennessee’s experience highlights a practical reality for many jurisdictions: IIS sustainability is not always about cutting costs outright. By improving transparency, adopting shared infrastructure, and reducing reliance on high-cost tools, programs can mitigate rising expenses and maintain system stability even in resource-constrained environments.

Slowing the Curve to Manage Rising IIS Costs