EHR vendors target small hospitals as market tightens

EHR vendors like Athenahealth are finding some success in a tight market by targeting hospitals with fewer than 200 beds. (Getty/andrei_r)

EHR vendors are finding some success among smaller hospitals even as many of those hospitals are being bought up by larger systems and forced to integrate onto a single platform.

Several vendors—including Athenahealth and Meditech—have found a groove in a post-Meaningful Use marketplace where the number of systems inking new EHR contracts has declined over the last three years, according to an annual report by KLAS that analyzes EHR market share.

Last year, 216 acute care hospitals with fewer than 200 beds signed a new EHR contract, accounting for 80% of deals throughout 2017.

“We don’t see that drying up anytime soon,” Erik Bermudez, vice president for the clinical continuum of care at KLAS told FierceHealthcare.

Last year, Athenahealth was the clear winner when it came to capitalizing on the small hospital market, closing 41 deals—including 29 with fewer than 25 beds. That market dominance is attributed primarily to the company’s payment model, which operates on a monthly cost rather than a large upfront commitment.

“For small hospital customers, that’s a very attractive model,” Bermudez said. “They don’t have the capital and financial backing to say we want to switch vendors and it’ll cost $150,000 up front.”

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Athenahealth is currently facing pressure from investors, led by Elliott Management, to consider a sale process. Elliott’s own $160 per share bid would take the company private, a move that could create some uncertainty for customers but isn’t likely to drive any providers away.

“I doubt the majority of their inpatient customer base cares,” Bermudez said. “They are worried about, 'can I get something that works and can I get something that helps me with my margins so I don’t go bankrupt and close my doors.'"

But acquisitions or changes to a vendor's business can create uncertainty in some cases. Despite buying up McKesson last year, Allscripts has been losing acute care customers. The company added Practice Fusion earlier this year, but there’s an overall sense the company is searching for an identity, something customers are aware of, Bermudez said.

Meanwhile, Meditech, which has remained relatively quiet, saw its first net increase in EHR market share in the last three years. That boost has been driven by the rollout of Expanse, which includes ambulatory integration. Meditech closed 15 small hospital deals in 2017, behind Epic at 19 and Cerner at 22.

Epic, Cerner battle for market share

Epic and Cerner, the two dominant vendors in the EHR space, continue to go toe-to-toe in the acute care market, often benefiting from an entrenched presence in large hospital systems that buy up smaller hospitals and bring them onto their EHR platform.

While Epic has won more large system bids over the past three years, Cerner has carved out space in the community hospital sector.

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Cerner took in the most acute care deals in 2017, but Epic sustained few loses, giving it a 26.7% market share to Cerner’s 24.8%, according to KLAS. Meanwhile, Cerner just closed a $10 billion deal with the Department of Veterans Affairs.

“Is one pulling away more than another? I’m not sure,” Bermudez said. “But as you look at that market in individual slices and large multiple-hospital decisions, Epic is definitely winning those more often than not.”