Will there only be a ‘few’ E.H.R Companies in the future?

August 13, 2010 in Uncategorized by support Team  |  Comments Off on Will there only be a ‘few’ E.H.R Companies in the future?

The CEO of the largest EHR company (Allscripts), Glen Tullman, has been very vocal that there will be a reduction in the number of EHR companies. I agree with his prediction since many companies that claim to be EHR companies are really not EHR systems that have e-prescriptions, lab results read directly into the EHR as well as the technology required by the government related to meaningful use. How many EHR companies will there be 10 years from today? I believe looking at other industries that have consolidated provide some good benchmark ranges. Businesses move through different business cycles from the growth stage to the mature phase. Generally, the buyer will always buy better technology/products if the products are better value/price than the previous offerings. This is true more in the growth phase of an industry (like iPads, new phones, EHR) than mature industry (like Automobiles).

If we look at the auto industry, a very mature industry, there are over 50 auto manufacturers that consumers have to choose from per Edmunds (there is even an auto company that launched a very successful IPO in 2010 – Tesla motors). The largest EHR company is Allscripts while the largest Auto company use to be General Motors. Allscripts, similar to General Motors (GM) during a certain time frame, is focused on making acquisitions. The most recent being the merger with Eclipsys. If Allscripts is investing much of its time and resources on buying companies, what will happen to their products? Will their fate be a similar path as General Motors – from top auto options for buyers of their products to one of the worse? GM went bankrupt due to bad management and large debt loads. The executives at the mature companies in the auto industry laughed at the Lexus and then Hydundai while the buyer did the right thing – evaluated the car on the quality of the product, service and reliability (a test drive plus the total cost were primary evaluation methods). Some buyers will only purchase Bentley’s and exotic cars due to their particular needs and desires. I believe the smart buyer will not be influenced by a CEO trying to increase their stock price/company value but by the product/service they need. If the EHR industry consolidates to the same as the Pharmaceutical Industry there will be >300 EHR companies (see MediLexicon for a list). If the consolidation is more like the auto industry, there will be approximately 50 EHR companies. Recommend practices choose an EHR system based on the quality of the product and the service.

Sources:

http://www.edmunds.com

http://www.medilexicon.com/pharmaceuticalcompanies.php

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