Has the Time Finally Come for EHR Vendor Contraction?

For several years, the market and its insiders have pontificated about when the vendor landscape is going to suddenly change and contract. With countless hundreds of EHR vendors in the space in some capacity, the annual trade publication trend pieces that run in December and January often predict the year we’re about the enter as the year in which the market with change and a great many vendors will disappear.

Last year this was the case. This year is no different. Next year will be the same.

In his July 2012 piece, “Why the EHR market is on the brink of mass consolidation,” Dr. Robert Rowley writes in Government Health IT that given that 70 percent of users on the top 12 systems out of about 600 that these market forces will lead to consolidation.

Given the number of systems on the market, many – a great many – will fail. Certainly, in a supply and demand market, this is going to be the case. There are simply too many systems and too few purchasers to make maintaining this level of competition impossible.

Additional factors for consolidation include companies buying other companies, as well as market need. For example, as Rowley points out, health systems and practices will require systems to meet all of their needs. Complete systems with EHRs, practice management, patient portals and other benefits will be of more value throughout the healthcare setting as reform and regulation continue to take hold.

And, obviously, those systems that are unable to meet the basic federal mandates of meaningful use will be rendered useless and worthless.

Essentially, this was the case recently when the U.S. Department of Health & Human Services revoked the meaningful use certification of two electronic health record systems for failure to meet the basic standards of the incentive program.

According to an announcement, as reported by Fierce Health, from HHS, EHRMagic-Ambulatory and EHRMagic-Inpatient developed by EHRMagic, Inc. of Santa Fe Springs, Calif., did not meet required functionality. As such, providers can’t use the software to meet the requirements meaningful use requirements. As has been reported, HHS should not have passed either system for certification and allowed physicians to use the system for meaningful use and its certification has been revoked

Though this is a first for the meaningful use program, there are sure to other systems that fail. Failing certification, as we are seeing, is a death sentence for such systems. As more systems fail, we’ll finally begin to see contract that the thought leaders in the market have predicted for so long.

This outcome has been predicted many times before, but in light of the recent action by HHS to ensure it doesn’t run a rubber certification stamp, perhaps we’re finally beginning to see the contraction so long talked about.

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