Friday, April 23, 2010

Growth and Consolidation of the EMR Industry

 

The passage of the ARRA and HITECH Act creates a mandate of 19 billion dollars to the health IT industry.  This creates fierce competiton amongst HIT vendors for these dollars.  Mandates are not the same as actual funding.  We see this in many other situations.  Let's hope the government will be capable of following through on the congressional mandate.  It's a bit like California's situation, or the year end delayed or non payment of medicaid bills each year. The government  is free to back out of mandates from congress unless all hell breaks loose.

Vendors will be quick to offer their solutions, even if deficient, inefficient for physicians to implement and use.  Feedback from physicians remains critical, otherwise solutions will remain stagnant if they can continue to market and sell poor software. There will be no driving force to improve with research and development.

Physicians and hospitals must vote with their pocketbooks, rather than aceeding to government mandate to 'buy something' whether it suits our needs  or not. In my opinion if caution and deliberation are bypassed much of the investment will be a total waste.  The time frame for implementation fits someone elses needs not that of the health care industry.

 

Austin Merritt points out the current state of affairs amongst the software companies .

  • NextGen – One of the “biggest names” in EHRs, NextGen focuses on medium to large enterprises. However, its system is certainly able to scale down to smaller practices. While it is often too expensive for groups with less than ten physicians, it has a strong position in the sweet spot of the market. Its .Net-based system is sold both directly and through a channel network, so NextGen is a good fit for Microsoft.
  • GreenWay – GreenWay has a nice product, but is toward the smaller end of the companies on this list. It sells primarily directly and has some channel partners. PrimeSuite 2008, its EHR and practice management sytem, is .Net-based and is popular among small and mid-sized groups. Microsoft could leverage its resources and Greenway’s technology to become a major force in the industry. Moreover, Greenway doesn’t come with any legacy of old architecture or acquired customers.
  • Pulse – Pulse has quickly climbed its way into the ranks of bigger EHR vendors and will likely stay here for some time. They were one of the first vendors to achieve 2011 CCHIT certification and are receiving a lot of buzz as a result. While the system is scalable and .Net based, Microsoft would likely want to pursue bigger fish for now.
  • Aprima – Aprima (formerly known as iMedica) has focused on its .Net framework and N-tier architecture from the beginning. As a result, its modern platform and interface make it widely received among physicians across a broad range of specialties. While Microsoft would likely focus on larger companies first, Aprima could be a nice additional partner to champion .Net.
  • AllScripts/Misys – A large brand and a publicly-traded company, it is a logical first place to look. After all, the company claims to have 160,000 physicians using its products. However, the 2008 merger between AllScripts and Misys presents the usual integration challenge, which might keep this firm busy for quite a while. Although we think the future of AllScripts/Misys is very promising, Microsoft probably wouldn’t get involved at this point.
  • eClinicalWorks – This system is probably the most ubiquitous of the list, especially among smaller practices. The recent deal to sell eClinicalWorks through WalMart will definitely increase its brand recognition and share of the market. However, the system is built in Java, an open programming language that is the traditional enterprise alternative to Microsoft .Net. Microsoft would most likely rather acquire a pure .Net system or one that is at least close to it, especially with Oracle, IBM and SAP all embracing Java.
  • Eclipsys – Eclipsys acquired MediNotes in 2009 in an attempt to move users to its Peak Practice EHR. While Eclipsys is fairly popular among hospitals, Peak Practice has not achieved similar success among small to mid-size outpatient practices. Existing MediNotes users are not thrilled about being forced to purchase Peak Practice and we’ve seen quite a few seeking a new solution from a new vendor. We think the success of the MediNotes deal is unclear and Microsoft would steer clear for now.
  • Athena – The youngest company on this list, Athena’s product offering is slightly different from the others. Its system is offered via software as a service (SaaS) and is combined with outsourced billing and revenue cycle management services. This offering is indeed unique, but not a suitable target for Microsoft due to its SaaS offering and labor-intensive service component.
  • Epic – This company possesses an interesting niche in the market. It has only 190 clients, but 150,000 physicians using its products. This is due to its focus on only the largest healthcare organizations in the United States. While this focus is great for Epic, it wouldn’t be effective for Microsoft. Epic will never be able to achieve the ubiquity in the small to mid-sized market where Microsoft dominates. It also sells direct, contrary to Microsoft’s traditional indirect sales mode.
  • Cerner – Cerner’s cash cow is Millenium, a product designed primarily for hospitals. PowerWorks, its outpatient EHR, does not possess the market share among physician practices that Millenium enjoys among hospitals. While Cerner is a recognized name, few practices consider PowerWorks. It is also an older system. Cerner would need to improve its PowerWorks offering before becoming a suitable target for Microsoft.
His analysis was based upon a possible acquisition strategy by Microsoft
Post a Comment