In a Top-Heavy EHR Market, Optimization Becomes the Focus

March 28, 2017
Hospitals and health systems are becoming increasingly focused on getting benefits from the EHR products that they have invested so much money into.

Last summer, a report from market researcher Kalorama Information revealed that Cerner, the Kansas City, Mo.-based electronic health record (EHR) vendor, thanks to its acquisition of Siemens Healthcare’s EHR business the year prior, holds the top spot in the EHR market, maintaining a slight lead over rival McKesson (Alpharetta, Ga.). In third place in the $27 billion EHR market is Epic (Verona, Wis.), followed by Allscripts (Chicago) in fourth place, the report noted.

In addition, within the EHR market, competitors are combining with a flurry of mergers and acquisitions among vendors. “Mergers and acquisitions are not new to the health IT market, but there seems to be an emerging strategy, which is attempting to reach a greater number of healthcare organizations, providers and patients through synergistic pairing,” the report’s authors wrote. As companies jump in and out of the market at a rapid pace, this creates concern for consumers who wonder if their vendor will be around after they purchase the product, according to the report. “At present, there are over 1,100 companies involved in the healthcare IT business in one aspect or another. This is not sustainable and so we are seeing consolidation activity,” Bruce Carlson, publisher of Kalorama Information, stated.

To this point, in an exclusive interview with Healthcare Informatics Managing Editor Rajiv Leventhal at HIMSS17 in Orlando, Allscripts CEO Paul Black noted that the consolidation that has taken place in the EHR market “is a natural evolution.” He added that if there is another stage of Meaningful Use, there won’t be anything close to 500 ONC (Office of the National Coordinator for Health IT)-certified EHRs. “I don’t know what the number [of certified EHRs] will be, but it will be greater than five and a lot less than [500],” Black said. “It’s a large industry and it’s becoming a more mature one, so there are haves and have nots in regards to the amount of money that one really has to spend on R&D to stay relevant and ahead of where the industry is going, and also to be a global player.”

Indeed, industry experts are quick to point out the speed at which consolidation in the EHR market is occurring, giving larger vendor companies the advantage, as they are financially stronger, while the smaller companies that are looking for funds to expand growth have become ripe for acquisition. “In the next three to five years, you will be talking about 20 or less [major EHR players],” predicts Mandy Long, chair of the Healthcare Information and Management Systems Society (HIMSS) EHR Association Clinician Experience Workgroup and vice president of product management at the Boca Raton, Fla.-based vendor Modernizing Medicine. Long additionally notes, “With the nature of the technology requirements that vendors have to meet in order to be successful and competitive, and thus make their client base successful, the bar being set is very high. You need to be architected to begin with and you need foresight to see where the industry is going. If you’re not easily set up to be interoperable, easily accurate, usable, and easy to update with rapid deployment, it will be challenging to stay competitive. We will see more vendors look at these requirements—as well as the ones needed for MACRA (the Medicare Access and CHIP Reauthorization Act of 2015)—and then exit the market,” she says.

To those paying close attention, it should not come as a surprise that the crowded field of EHR vendors is dwindling. Back in 2013, a Black Book Market Research report predicted that most vendors in this space will likely go out of business, merge or be acquired by 2017, according to the then-conducted survey of 880 EHR consultants, analysts, managers and support team members. Fast-forward to four years later, while there are still plenty of vendors offering an EHR product, it’s estimated that the top 10 EHR vendors account for about 90 percent of the hospital EHR market, based on 2015 Meaningful Use attestation data from the Centers for Medicare and Medicaid Services (CMS).

Tonya Edwards, M.D., physician executive at consulting firm Impact Advisors, agrees that consolidation is the most significant trend happening in the EHR market today, noting that for large health systems, the options for enterprise solutions have gone down to three key vendors—Epic, Cerner, and Meditech (Westwood, Mass.), with a “smattering” of Allscripts. Both Long and Edwards feel that whichever vendor has the market lead at the moment—Cerner, Epic or another company—is not as important as the fact that there are just a few vendors that are dominating most of the space.

Tonya Edwards, M.D.

Edwards says she’s also seeing a trend of large enterprise vendors trying to get out to smaller and medium-sized organizations, many of which cannot afford the Epics and Cerners of the world. This is happening more frequently in physician practices and smaller provider organizations that can essentially purchase Epic’s Community Connect product, for instance, for a much cheaper cost via a “host” hospital locally that is already on Epic, explains James McHugh, Chicago-based managing director, revenue cycle business unit leader at consulting firm Navigant. This smaller organization can that way outsource the IT components of the EHR implementation to that host hospital, thus getting not only a cheaper cost than they would by purchasing it on their own, but also taking advantage of the transfer of clinical data and having everything on a single platform, McHugh says. “It is a trend we’re seeing quite a bit. And of course those two [provider] organizations might be competing, so they have firewalls to manage things. But the smaller systems are saying they want a Cadillac system even though they can’t afford it. So they will partner with a large system in the area to get on the Cadillac. We are seeing a lot of that on the physician side. They want to remain independent but they also want a really good EHR,” he says.

Long adds that in the acute care space, which she calls a “complex clinical environment,” there is the big technology barrier for some systems, regardless of if they are large or small. “So if these products were not architected to be able to peel apart their data to look at outcomes, and be able to play with other systems, the level of investment that will get them there will be very close to a rewrite. And that’s hard,” she says. For the smaller players specifically, Long notes that it may be a funding issue. “You may be architected in some way to get to that data, but the road from an investment standpoint may lock up your roadmap for years. So then it’s a question of being able to compete. If you can’t do more than regulatory requirements, how can you compete over the years with solutions who can do much more beyond that?”

Optimizing for the Future

Indeed, hospitals and health systems are also becoming increasingly focused on getting benefits from the EHR product, and therefore are deciding what’s in their best interest to prioritize for optimization. “Organizations are trying to get benefits out of the products they have spent so much money on. And they are trying to find resources to do that, since they have already spent all their money,” Edwards says, adding that optimization and seeing true ROIs are big works in progress. “I have not seen any organization that I can point to and say that this one is doing a superior job. Those that are doing a better job than others, though, are focusing on benefits and are putting a really good governance system in place that helps make them make good decisions that helps align with the organization’s strategic priorities as they continue to prepare for a value-based [healthcare system].”

McHugh, who previously was a founding partner of McKinnis Consulting Services, a revenue cycle firm that specialized in EHR implementations and optimization, and was recently acquired by Navigant in December 2015, adds to Edwards’ point, noting another piece to this trend that he’s seeing take place: that industry-wide, there have largely been poor reactions regarding EHR implementations. “We do know that ROIs on leading EHR products exist, but you don’t [hear much about them]. How quickly are these systems realizing it?”

McHugh adds that the top EHR vendors are now providing resources on the back end for their installs for remediation or even outsourcing of key revenue cycle functions. “So this is a signal that the industry is starting to accept poor implementations,” he says. “In a sense, this is offsetting poor implementation, and that’s pretty troubling. Rather than the vendors getting the original implementation right, they are being paid additional capital to fix the broken implementation. This presents conflict,” he says. 

James McHugh

As such, McHugh says this is further evidence that healthcare organizations need to develop and execute a holistic strategy prior to the implementation of technology instead of just getting the out-of-box solution in. He feels that organizations need to understand what the EHR vendors are doing and what their role in the conversion really is. “Is it managing IT, [making] an implementation plan, or managing more than that and looking at the metrics associated with it? Vendors talk a lot about selling the ROI during install, but they are not taking the time to ensure success of the install,” he says.

Speaking further about optimization, McHugh says that everyone defines the word differently. EHR vendors will define it as fixing the out-of-box solution that they put in place and building out work queues that weren’t in place for the go-live. “But for us,” says McHugh, “that should have been done during implementation and worked out at that point. These are mature enough products where we shouldn’t have to push a lot of these things to post go-live.”

McHugh says that the reason so many organizations fail in their installs is because they do not take the operational needs and requirements into account, and they don’t prioritize the financial risks associated with the install early and often. “I tell our clients that the vendor is there to make sure you go live on time and within budget, because that’s what an IT install is about. But if you treat this as an IT install, it won’t go well. They will go live on time and within budget, but that doesn’t mean it’s successful,” he says. He adds that while the CIO takes on the IT part of the install, it’s the CFO’s job to make sure to minimize the financial impact on the organization. “Any EHR install is a disruption. They are very complex systems that are being put in place and they have to be customized, so this represents a huge disruption to the revenue cycle. Someone needs to manage that and mitigate the financial risk associated with the install,” he says.

In the end, it will undoubtedly be critical for vendors in the EHR market to make sure that their products are streamlining processes and improving the user experience. Many physician leaders still point to a study published last September in the Annals of Internal Medicine which found that during office hours, physicians spend nearly 50 percent of their time on EHR tasks and desk work, and outside office hours, they spend another one to two hours of personal time each night doing additional computer and other clerical work. This latest research has only added fuel to the argument that health IT can contribute to physician burnout. 

To this point, Edwards notes that the big-name vendors are doing lots of work to improve that user experience since products that were implemented three to five years ago or longer did not give great thought to usability aspects, and therefore have added a lot of unnecessary work for providers. Long agrees, adding that now that the physician community has experience with these products, they are more vocal around the importance of usability around technology. “There is a passion there. From a vendor perspective, I love that. I can engage with the physician community and end-user community, and understand what they need. This helps to drive better product at the end of the day,” she says.

Moving forward, the pressure will only ramp up as provider stakeholders will have to deal with the ongoing regulatory requirements related to health IT in addition to applying predictive analytics to anticipate outcomes—a necessary endeavor in healthcare’s future. As such, all of the sources interviewed for this story agree that the emphasis on optimization and getting a clear ROI will be greater than ever. Long concludes, “I hope that we as an industry are able to come together to get at the main goal—improve patient outcomes. The idea is to deliver high-quality care, enable the patient experience, and improve the patient-provider visit.”