We sought to better understand the perceived costs and benefits of joining a nascent health information exchange (HIE) from the perspective of potential provider organization participants. We therefore conducted semi-structured interviews with organizational representatives. Interview transcriptions were thematically coded, and coded text was subsequently aggregated to summarize the breadth and depth of responses. Although no respondents expected HIE to result in net financial benefit to their organization, all respondents recognized some potential benefits, and some respondents expected HIE to result in overall organizational benefit. Disproportionate benefit was expected for the poorest, sickest patients. Many respondents had concerns about HIE increasing the risk of data security breaches, and these concerns were most pronounced at larger organizations. We found little evidence of organizational concern regarding loss of patients to other organizations or publication of unfavorable quality data. If HIE's greatest benefactors are indeed the poorest, sickest patients, our current health care financing environment will make it difficult to align HIE costs with benefits. To sustain HIE, state and federal governments may need to consider ongoing subsidies. Furthermore, these governments will need to ensure that policies regulating data exchange have sufficient nationwide coordination and liability limitations that the perceived organizational risks of joining HIEs do not outweigh perceived benefits. HIE founders can address organizational concerns by attempting to coordinate HIE policies with those of their largest founding organizations, particularly for data security policies. Early HIE development and promotional efforts should not only focus on potential benefits, but should also address organizational concerns.