How is it possible to explain the large number of EMRs and EHRs available in the U.S. market? I personally use the term EMR to refer to hospital systems and EHR to refer to physician office/clinic systems. A recent article raised this topic (see More electronic health record systems than you imagined). Below is an excerpt from it:
Anyone who's wandered the showroom floor at a Healthcare Information and Management Systems Society convention knows there are tons of health information technology companies. There were upwards of 1,100 exhibitors this year. But earlier this month, Jodi Daniel, director of the Office of Policy and Research within the Office of the National Coordinator for Health Information Technology, presented a slide at an Health Information Technology Policy Committee meeting with some health IT market numbers that I found nothing short of astonishing. Believe it or not, according to Daniel, there are 613 "complete" electronic health record systems and 399 "modular" systems that have been tested and certified for use in the federal EHR incentive payment program in the ambulatory-care market alone. There are another 87 complete and 378 modular EHR systems for inpatient venues.... Simply put, it is a market that is still expanding and not yet consolidating. "It is amazing to see the rise of solutions being considered outside of the top 11," [a consultant] said. "You can see that in the ONC numbers and the number of private venture capital groups getting into the business. It's just a market in total upheaval." So, I asked [him], do you think it's possible there's an EHR out there in that herd of 602 “other” EHRs not in your top 11 that's the "killer app" in the making, one that may one day challenge today's market leaders? He said he's had conversations with several CEOs of name brand companies and "they're very cognizant of the fact there is somebody out there who could replace them." "I'm sure there is somebody in the weeds," [he] said. "I just can't say who it is. I just don't know."
Here are some some of my explanations why we are seeing 1,012 complete/modular systems in the ambulatory care market and 465 complete/modular systems for inpatient venues:
- There are 5,754 hospitals in the U.S. of which about a third are rural and two-thirds are urban (see: Fast Facts on US Hospitals). These rural hospitals are often quite small as are some of the urban facilities. One could speculate that the hospital EMR market is fairly large and providing an EMR for a smaller hospital would not be that technically challenging and possibly remunerative
- The EHR market (i.e., physician-office/clinic systems) has always been chaotic outside of the market leaders. It's not that that difficult to develop such a system. Moreover, physician buyers may not always be that sophisticated or looking for low-price bargains. Such buyers may tilt toward a system recommended by a friend or relative or respond to a good sales pitch from a smaller company.
- The start-up costs for a software company entering the market for a physician office system are relatively low. Many such costs are labor-related for writing code so there is plenty of wiggle room for new companies that want to develop a product.
Finally, I want to speculate about whether the EMR/EHR market leaders need to worry about some smaller ("killer app") companies in the pack replacing them as suggested in the excerpt above. In my view, this scenario is almost a certainly. In the LIS world, some of the market leaders have been replaced roughly every 15 years. However, this pace may quicken these days due to the more rapid emergence of new technology such as cloud computing. Healthcare computing in general lags about a decade or more behind the technology in other industries and has a higher cost, relatively speaking. The explanation for this is that hospital executives are less IT-savvy than their counterparts in other industries and the industry is more regulated and therefore more cautious. In my opinion, one of today's smaller EMR companies is going to hit the jackpot in the near future with the following system and business model: (1) a modern computing language; (2) a focus on cloud computing, providing a substantial cost advantage; and (3) a high degree of functionality plus an opportunity for some local customization that will be more appealing to customers than the lock-step rigidity of a leading EMR vendor like Epic.