While some segments of the healthcare and health IT industries have seen substantial merger and acquisition activity, the ambulatory electronic health record market isn't likely to consolidate until after the industry goes through Stage 3 of the Meaningful Use incentive program, according to Chilmark Research health IT analyst John Moore in a recent blog post.
Moore says that the ambulatory EHR market is not yet "ripe" for consolidation, since the hundreds of vendors in the market are investing heavily to meet the requirements for Meaningful Use. He points out that the incentive program actually caused new vendors to enter the market and kept several existing ones in business longer than perhaps they would have otherwise.
He also notes that since, according to him, two-thirds of all acquisitions fail, consolidating at present may not make the best business sense.
"At this juncture, it would be foolhardy to try and execute an EHR acquisition roll-up strategy," he says. "The technology has yet to stabilize, significant development investments are still required and most vendors do not have sufficient market penetration. Better to wait until the dust settles and clearer stratification of the market [who will remain viable, who will not] becomes apparent."
Note that Moore doesn't predict that consolidation won't occur; it's more of a timing issue. Moreover, this view is not shared by everyone. At least one other blogger recently posted that consolidation of this market was imminent.