As 2012 came to an end and we wrapped up another eventful year here at Galen Healthcare Solutions, I did what I like to do as holiday songs filled the office – write a blog on interesting articles I finally got the chance to catch up on. The theme for the past year was Meaningful Use, of course, and Conor Green, Vice President of Triple Tree, a consulting firm focusing on healthcare compliance, payment integrity, and provider-payer convergence among other things, wrote a great article called “Numbers Don’t Lie – The EHR Market Must Consolidate” in August 2012 and I think is worth looking at again.
From 2011 through May of 2012, 2400 hospitals and 110,000 eligible providers completed the attestation process and received 5.7 billion dollars in the form of incentive payments for demonstrating meaningful use of their electronic health record systems. This accounts for nearly 50% of the hospitals and 20% of providers nationally. Attestation, by definition, is the process in which practitioners verify that they have used EHR in a manner that is congruent with the incentive program’s criteria. Green mentions in his article that there is a discrepancy between the CMS press release numbers and the data released by the data.gov database, but finds 77,000 attestations were initiated between 2011 and May of 2012.
Green has some great charts that display the information in a valuable light. Of the reported 405 separate EHR vendors (550 vendors are listed on CMS’s Certified Healthcare IT List), approximately 336 of them offer an ambulatory product. As Green astutely points out, this signifies that over 200 vendors are without one provider that has successfully attested and qualified for MU incentive payments.
Looking at the relatively large number of vendors, a concentration of users attesting is found within the top vendors. Within the inpatient setting this trend is even more obvious, as the top 6 vendors represent 75% of the attesting population. On the ambulatory side, of 336 vendors, the top 15 represent 75% of the providers population attesting. While not that surprising, that fact is somewhat concerning. What about the other 25% of the provider population that utilizes the other 95% of ambulatory vendors? One might infer this data implies that 95% of the vendors are offering a product that is not serving 25% of the provider population well going into the future. With that said, this significant portion of the provider population are arguably subject to a higher risk of having to adopt a new EHR system and/or undergo a conversion as the industry consolidates.
Within the ambulatory market, Epic (which does not market an ambulatory EHR product) has a considerable lead among the top vendors in that particular sector. What does this mean? That the likelihood of hospitals acquiring or having some controlling role within the ambulatory setting is increasing. Green references “Becker’s Hospital Review” for a snapshot of this trend. Although there are a multitude of possible factors that are contributing to this trend, in the end, it all boils down to money. The cost of purchasing, implementing, and maintaining an EHR and the efficiencies created by utilizing existing infrastructures and staff competencies (or lack-thereof) increases the value of a hospital-clinic relationship in regards to hospital hosted ambulatory EHR systems.
Green points out an interesting question with his example of Athenahealth & their Athenaclinical user base. The vendor claims that of their 6000+ providers, approximately 2050 of them have successfully attested to date. This begs the questions, “Why?” and “What about the other 3-4 thousand users?” Be assured, there are a variety of underlying causes for this short fall, but with the larger client’s I have had the opportunity to work with, there is one glaringly obvious reason – staffing. Overcoming the sheer obstacle of the work effort required to complete an initiative like adopting any EHR and being MU compliant has effectively excluded a large number of these practices and providers from attestation.
The resources needed to build a system that accommodates every specialty, individual clinic sites and subsequent providers, is substantial and in many cases unworkable for these clients, without support from vendors and third party groups. Add the fact that a majority of large scale EHR rollouts take significant amounts of time (as they onboard new providers and sites, supply adequate training, go-live support, application & IT support), not to mention staying current with the continuous software updates and policy changes in attempt to conform to MU criterion and you can quickly see how large of an internal Human Resources effort is required. But, I digress.
Green brings us back on topic by pointing out that one of the goals of MU is to improve interoperability, specifically, “A new national infrastructure to support deployment & beneficial use of EHRs…” Having upward of 600 vendors that offer thousands of products does not seem like a great environment to foster the success of the incentive program’s goal. Instead, it is the product of a demand (stimulated or not) being met by suppliers (capable or not) that are trying to get a “slice of the pie” of the EHR industry.
As Green states in reference to the EHR vendor market, “it certainly seems ripe for consolidation…” and I would have to agree. Taking into consideration the hospital-clinic alignment trend, payer-provider alignment changes, and the fact that the incentive monies are limited and are quickly expiring and the future appears clear. From a business perspective, all of these factors indicate a maturing market, affected by a high number of entrants, vendors, and products that will result in consumers’ becoming more price sensitive as incentive monies that might have been used to subsidize the cost of EHR implementation become scarcer. With all that said, the market forecast looks like consolidation of EHR vendors and a downward pressure on prices are inevitable. This indicates there may be more adoption and conversion in the foreseeable future as the “best” EHR vendors compete for market share.