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Ambulatory EHR and Practice Management System Demand

September 26, 2011
by John Degaspari
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Demand for New and Replacement Systems is Relatively Strong Among Certain Physician Groups

Demand for electronic health record (EHR) and physician practice management (PM) systems is relatively strong among certain physician groups, and is expected to remain so over the next 12 to 24 months, according to a recently released survey by CapSite Consulting, Williston, Vt. One objective of the study, which is the company's third annual report on EHR and practice management system demand, was to assess how the Health Information Technology for Economic and Clinical Health Act focus on stimulating adoption and achieving meaningful use is influencing demand for EHR and practice management solutions.

Source: CapSite
Source: CapSite

Source: CapSite
Source: CapSite

The survey polled about 1,300 physician groups ranging in size from one or two doctors to groups of more than 100 doctors, roughly divided between freestanding groups and hospital-owned groups. Each year, more physician groups have made an EHR purchase. When respondents were asked if they recently (defined as the prior 18 months) purchased an EHR, 62 percent said they had made a purchase, compared to 36 percent and 40 percent in 2009 and 2010, respectively. Purchases of ambulatory EHR solutions have increased steadily each year over the last several years.

Source: CapSite
Source: CapSite

Source: CapSite
Source: CapSite

According to CapSite senior vice president and general manager Gino Johnson, demand for EHR and PM solutions has continued to accelerate and is on track to nearly double in the volume of purchasing activity that was measured in 2010. “This activity is continuing, and as we extrapolate the full year of 2011, we have confidence [demand] will outstrip 2010 by a significant margin,” Johnson says. He adds that demand has not yet reached a plateau, and noted that market demand for ambulatory EHR and PM solutions could reach $3 billion by 2013.

THIS ACTIVITY IS CONTINUING, AND AS WE EXTRAPOLATE THE FULL YEAR OF 2011, WE HAVE CONFIDENCE [DEMAND] WILL OUTSTRIP 2010 BY A SIGNIFICANT MARGIN.

Among the highlights of the study:

  • 63 percent of physician groups indicated they would replace their current PM for an integrated PM/EHR solution;

  • 38 percent of physician groups plan to upgrade or replace their current PM system; and

  • Efficiency and quality ranked as the top two reasons for purchasing an EHR solution, while stimulus funding ranked third.

GROWTH FACTORS

Demand for ambulatory EHR has increased steadily since 2006, notes Johnson, which he attributes to stimulus monies from the American Reinvestment and Recovery Act/Health Information Technology for Economic and Clinical Health (ARRA-HITECH) Act. Those funds have prompted many physician groups to decide that now is the right time to invest, he says, adding that attractive pricing models and strong marketing efforts on the part of vendors have also been positive factors.

A significant number-63 percent-of respondents said they would consider replacing their existing PM solution with a combined EHR/PM solution. The number has increased steadily over the last three years from 46 percent. Johnson notes that the response suggests that an increasing number of physician groups are looking for vendors that have a strong message of an integrated EHR-PM solution. He adds that an integrated EHR/PM solution makes sense from a simplicity standpoint. Having one less vendor relationship to manage is a bit more attractive from a physician group perspective, he says.

HOSPITAL-OWNED VERSUS FREESTANDING PRACTICES

The survey uncovered some differences between hospital-owned and freestanding physician groups. Hospital-owned practices are further down the adoption path, since they generally have better financial resources, and in many cases, may already have an EHR and are now in a replacement cycle, Johnson notes. Freestanding physician practices, on the other hand, have been somewhat slower on the uptake, and are more likely to represent a new search process for an EHR, he says. He also observes that larger physician practices tend to be hospital owned. Quite a number of physician practices have been acquired by hospitals during the last year: 60 percent of the practices that responded to last year's survey were freestanding; that number is now 50 percent.

The top three reasons for making an EHR purchase are quality, efficiency and ARRA-HITECH stimulus funding. For both hospital-owned practices and freestanding practices, stimulus funding ranked third. For hospital-owned practices, quality and efficiency were equally important factors, while for freestanding practices, efficiency ranked far higher in importance than quality or funding.

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