Electronic health record (EHR) behemoths Epic Systems and Cerner continue to corner the U.S. hospital EHR market. For the second year in a row, Cerner signed the highest number of new hospitals, but large private sector hospitals are almost exclusively choosing Epic technology, according to a new report from KLAS Research.
The report, “US Hospital EMR Market Share 2019,” from the Utah-based KLAS, noted that 2018 was the busiest of the past three years in terms of EMR purchasing. “This energy impacted every market sector, with the U.S. government finalizing contracts, three large health systems changing EMRs, and the small-hospital market continuing to see churn,” the researchers wrote.
Indeed, just like it did in 2017, Cerner signed the highest number of new hospitals but—due to customer attrition—came in second in terms of net market share gain. In 2018, Cerner cornered the market on U.S. government contracts, finalizing the deal with the Department of Veterans Affairs, giving the Kansas City-based Cerner its biggest net gain of any year KLAS has measured. The VA deal alone includes 147 acute care and 20 specialty hospitals, accounting for 76 percent of Cerner’s 2018 hospital “wins,” according to the report, which also noted that government contracts have made up 39 percent of Cerner’s hospital wins over the past five years.
But in the private sector, a different story is told. The Verona, Wis.-based Epic is continuing to dominate this segment, especially when it comes to large provider organizations. Although hospitals with 500+ beds and multihospital health systems are not making EHR purchases as much as they once did, those that do are choosing Epic. All three of the large, private organizations that made an EHR decision in 2018 went with Epic, switching from Allscripts or Cerner.
“At this point, most large organizations have invested heavily in implementing a single, go-forward solution across all of their hospitals, so future purchases in the large market will be highly contested and require a significant rip and replace,” according to the KLAS researchers. Overall, four core vendors remain in the large patient care organization space—Epic (with 163 hospitals), Cerner (77 hospitals), Allscripts (16 hospitals), and MEDITECH (12 hospitals). Of these, only Epic and Cerner have had net positive changes in market share among large hospitals (500+ beds) over the last decade, KLAS reported.
For this segment—large hospitals with more than 500 beds—Epic has a 58 percent market share with Cerner coming in second, holding 27 percent of the market. And among all acute care hospitals, Epic holds 28 percent of the market share, with Cerner right behind at 26 percent. MEDITECH ranks third with a 16 percent share, and CPSI fourth with a 9 percent share.
As far non-Epic and Cerner vendors, MEDITECH’s Expanse web-based solution has appealed to both the vendor’s own customers and outside ones—particularly small and mid-sized hospitals. However, MEDITECH is one of the vendors most impacted by M&A activity among customers: 16 of its 33 hospital losses in 2018 were the result of market consolidation by large organizations.
Overall, mergers and acquisitions continue to significantly impact hospitals’ EHR purchases. Since 2014, 20 percent of acute care hospitals that have switched EHR vendors have done so as a result of M&A activity, and over 50 percent have done so as part of a broader organization decision, the report found. According to KLAS, “This consolidation—and the desire for easy data sharing—means that acute care EMR purchasing today is less likely to be based on functionality considerations and more likely to be based on factors such as consolidation to a standardized platform or integration with referral organizations. Overall, Epic has seen the most benefit from this M&A and standardization activity.”
Allscripts, meanwhile, experienced increased losses in both of the last two years. In 2018, 14 hospitals—nine of which came from one large organization—left the Sunrise Clinical Manager (SCM) platform; all switched to Epic. And 16 hospitals left the Paragon platform, moving to one of Cerner, Epic, MEDITECH, or CPSI. Allscripts’ Horizon product, which was acquired in 2017 from McKesson, has been “sunsetted,” as three hospital customers of this platform made go-forward decisions last year, with none choosing Allscripts. Of Allscripts’ 33 total hospital losses in 2018, 15 percent were the result of some sort of customer consolidation, according to the report.
Customers are reporting that athenahealth—which was recently acquired by private equity firm Veritas Capital and hedge fund Elliott Management, and which has come off a tumultuous year that included the resignation of CEO and President Jonathan Bush—has paused sales and stopped responding to RFPs, though the vendor has told KLAS that is committed to developing its hospital product.
KLAS was also unable to confirm any new contracts for eClinicalWorks in 2018, and the customers who have contracted for the vendor’s inpatient system in previous years are still waiting for that beta product, the report revealed. In 2017, the U.S. Department of Justice announced a settlement that held eClinicalWorks, and the company’s founders and executives liable for payment of $155 million to resolve a False Claims Act lawsuit in which the company allegedly violated federal law by misrepresenting the capabilities of its software and for allegedly paying kickbacks to certain customers in exchange for promoting its product.
Small hospitals with less than 100 beds “will continue to have high purchasing energy as customers face consolidation, governmental regulations, and financial pressures,” KLAS researchers stated.