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In a Top-Heavy EHR Market, Optimization Becomes the Focus

March 27, 2017
by Rajiv Leventhal
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Consolidation in the EHR market is forcing many vendors to exit the space. Now, the onus is on those remaining vendors to make sure their products streamline processes and improve the user experience

Last summer, a report from market researcher Kalorama Information revealed that Cerner, the Kansas City, Mo.-based electronic health record (EHR) vendor, thanks to its acquisition of Siemens Healthcare’s EHR business the year prior, holds the top spot in the EHR market, maintaining a slight lead over rival McKesson (Alpharetta, Ga.). In third place in the $27 billion EHR market is Epic (Verona, Wis.), followed by Allscripts (Chicago) in fourth place, the report noted.

In addition, within the EHR market, competitors are combining with a flurry of mergers and acquisitions among vendors. “Mergers and acquisitions are not new to the health IT market, but there seems to be an emerging strategy, which is attempting to reach a greater number of healthcare organizations, providers and patients through synergistic pairing,” the report’s authors wrote. As companies jump in and out of the market at a rapid pace, this creates concern for consumers who wonder if their vendor will be around after they purchase the product, according to the report. “At present, there are over 1,100 companies involved in the healthcare IT business in one aspect or another. This is not sustainable and so we are seeing consolidation activity,” Bruce Carlson, publisher of Kalorama Information, stated.

To this point, in an exclusive interview with Healthcare Informatics Managing Editor Rajiv Leventhal at HIMSS17 in Orlando, Allscripts CEO Paul Black noted that the consolidation that has taken place in the EHR market “is a natural evolution.” He added that if there is another stage of Meaningful Use, there won’t be anything close to 500 ONC (Office of the National Coordinator for Health IT)-certified EHRs. “I don’t know what the number [of certified EHRs] will be, but it will be greater than five and a lot less than [500],” Black said. “It’s a large industry and it’s becoming a more mature one, so there are haves and have nots in regards to the amount of money that one really has to spend on R&D to stay relevant and ahead of where the industry is going, and also to be a global player.”

Indeed, industry experts are quick to point out the speed at which consolidation in the EHR market is occurring, giving larger vendor companies the advantage, as they are financially stronger, while the smaller companies that are looking for funds to expand growth have become ripe for acquisition. “In the next three to five years, you will be talking about 20 or less [major EHR players],” predicts Mandy Long, chair of the Healthcare Information and Management Systems Society (HIMSS) EHR Association Clinician Experience Workgroup and vice president of product management at the Boca Raton, Fla.-based vendor Modernizing Medicine. Long additionally notes, “With the nature of the technology requirements that vendors have to meet in order to be successful and competitive, and thus make their client base successful, the bar being set is very high. You need to be architected to begin with and you need foresight to see where the industry is going. If you’re not easily set up to be interoperable, easily accurate, usable, and easy to update with rapid deployment, it will be challenging to stay competitive. We will see more vendors look at these requirements—as well as the ones needed for MACRA (the Medicare Access and CHIP Reauthorization Act of 2015)—and then exit the market,” she says.

To those paying close attention, it should not come as a surprise that the crowded field of EHR vendors is dwindling. Back in 2013, a Black Book Market Research report predicted that most vendors in this space will likely go out of business, merge or be acquired by 2017, according to the then-conducted survey of 880 EHR consultants, analysts, managers and support team members. Fast-forward to four years later, while there are still plenty of vendors offering an EHR product, it’s estimated that the top 10 EHR vendors account for about 90 percent of the hospital EHR market, based on 2015 Meaningful Use attestation data from the Centers for Medicare and Medicaid Services (CMS).

Tonya Edwards, M.D., physician executive at consulting firm Impact Advisors, agrees that consolidation is the most significant trend happening in the EHR market today, noting that for large health systems, the options for enterprise solutions have gone down to three key vendors—Epic, Cerner, and Meditech (Westwood, Mass.), with a “smattering” of Allscripts. Both Long and Edwards feel that whichever vendor has the market lead at the moment—Cerner, Epic or another company—is not as important as the fact that there are just a few vendors that are dominating most of the space.

Tonya Edwards, M.D.

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