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Why the electronic health record (EHR) market is poised for disruption

Brian Eastwood | Feb. 11, 2014
Simply put, 2014 is a big year for electronic health record vendors. They must adhere to stricter standards under the federal government's meaningful use program while convincing healthcare providers that they can meet future needs for information exchange, patient engagement and data analytics. Not everyone will make the cut.

Ill-prepared EHR Vendors Will Fall Victim to Meaningful Use
Those points are consistent with the Center for Medicare and Medicaid Service's meaningful use stage 2 criteria, which go beyond simply using electronic records to actually sharing them - with labs within the hospital, with other hospitals, with pharmacies via e-prescriptions and, critically, with patients. (Many have suggested that the patient engagement benchmark is too difficult to achieve, but it's really just about communicating with patients electronically.)

The EHR vendors that struggle to do this - and to present this shared data in a clinical decision support environment, which aims to helps physicians make more informed care decisions - will have the most trouble with meaningful use stage 2, says Judy Hanover, research director with IDC Health Insights.

Market consolidation is more likely in the saturated ambulatory EHR space, where five vendors control more than half the market. Ambulatory EHR vendors who aren't Epic Systems, Allscripts, eClinicalWorks, NextGen Healthcare or GE Healthcare find it increasingly difficult to find new customers, especially for software installations and not perpetual subscriptions, Hanover says.

On top of that, achieving meaningful use stage 2 certification is an expensive proposition, Hanover says. Consolidation is inevitable, she says, and should continue throughout the year. (Others suggest the EHR market shakeout will last several years.)

The less-mature inpatient EHR market, though also due for consolidation, is likewise due for innovation. Moore says meaningful use created a "false market" that led many providers to implement rigid, inflexible EHR systems (with poor usability and customer service to boot) simply to cash in. Here, the meaningful use stage 2 deadline extension announced in December should therefore help providers who are looking for a new EHR system or who need to "take a breath and catch up," Hanover says.

If nothing else, the fact that smaller practices lag in EHR adoption could provide an opening for flexible (or even free) EHR vendors as well as companies providing components, modules or "augmented functionality," Hanover says, adding that platform-based systems outside the EHR itself but interacting closely with it could help those practices meet their patient engagement, quality reporting and population health management needs.

The Days of EHR As 'Deposit-only System' Are Numbered
Stage 3 of meaningful use, meanwhile, will further disrupt the EHR market. For starters, Hanover says, it places even more emphasis on interoperability to "bend the cost curve." EHR vendors that have found it to their advantage to be insulated will find that "their excuses are getting smaller and smaller," she says.

In addition, stage 3 essentially redefines the EHR as a "collaborative health record," Moore says. In the context of patient-generated data, he asks, how will EHR software bring in this data, validate it, make sure it in fact came from the patient, accept the most appropriate date for clinical decision support and aggregate it from multiple sources - and, oh, on what frequency? The status quo won't cut it; physicians are "pretty fed up" with their EHRs, Moore says, with one describing the software to Moore as a "deposit-only system."


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