Perhaps not unexpectedly, the market for electronic health record software is strong and is expected to stay that way for several years. According to a new study released this week by Millennium Research Group, the market will enjoy more than 12 percent growth per year, and is expected to reach more than $8.3 billion by 2016. The report comes on the heels of a Frost & Sullivan report that predicts that market revenues for EHR systems will peak at $6.5 billion in 2012 for new licensing and upgrades.
The big drivers of this growth are the government's EHR incentive programs, which provide bonuses to those who adopt EHRs and meet the Meaningful Use requirements, and impose penalties on those who don't starting in 2015.
But the story is a bit more complicated, according to Mickel Phung, a market research analyst and author of the study, who was fairly surprised by the results. "I expected higher growth," he tells FierceEMR. "Early reports from 2008 and 2009 indicated 20 percent growth. That didn't happen."
Why the less-than-anticipated growth? "Meaningful Use has had a significant impact, but physicians are still hesitant and confused," Phung says.
Part of the problem is that there are so many vendors offering different EHR products. More than 750 companies entered the EHR market within the past two years. Even though some have already dropped out, roughly 300 vendors remain, and not all of them offer certified EHR products required for meeting the government's Meaningful Use requirements.
Phung still sees a lot of room for the market to grow, especially on the hospital side, where facilities are very concerned about incurring the penalties and will be purchasing EHR products to replace older systems. He also predicts strong growth in 2011 and 2012 in EHR purchases by physicians, but expects those gains to begin tapering off in 2013.
Interestingly, Phung also believes that the establishment of a safety board, as recommended by the Institute of Medicine this week, will spur sales of EHR systems. "A safety board will drive penetration of the market," he says. "It will increase the confidence by physicians in these products, so it will benefit providers and vendors."
He also predicts that the EHR market will be affected by vendor consolidation, and that providers will gravitate to more well-established vendors, such as Epic Systems and Allscripts.
Phung recommends that hospitals and physicians currently shopping for an EHR system should:
- Ask vendors if the EHR system being offered can integrate with systems that the provider already owns;
- Look for a product that is suited to the provider's capabilities. "Don't buy what you can't handle because of its high IT demands and high costs," he warns;
- Factor in other costs, such as training, implementation expenses, and licensing costs;
- Ask about data migration fees should the provider choose to move to another system. This can be particularly important for those hospitals seeking to replace an incomplete or outdated EHR system. "This can be a huge cost and no one asks about it," Phung says.