• by Bruce Carlson
  • April 28 2017
  • EMR

The State of the EMR Market in 2017

The State of the EMR Market in 2017

EHR Market Share: Cerner, McKesson, Epic Lead

Four companies – two healthcare IT giants and the other two electronic medical record market participants– have the largest electronic health records (EHR) market share. Cerner, McKesson and Epic saw market share position unchanged from last year, though percentages moved a bit as detailed in the healthcare market research firm’s report,  EMR Market 2017: Electronic Medical Records in an Era of Disruption.  

 Kalorama has covered the electronic health record (EHR)  market for a decade, and our latest report on electronic health records, one of the high-growth healthcare information technology markets, indicated that despite the domination of major players, there are still a number of smaller competitors thriving in EMR, and there is room for disruption due to a number of trends that are happening.  Kalorama noted changes like frustrated physicians and hospitals ready to switch vendors, changes in government policy with the new administration.  All of these could disrupt the market. 

Here’s the truth about EHR market share: A few companies own more than half of the market, but it’s still true to say no one EMR vendor, not even the largest healthcare IT firms, have even a fifth.  We think that is because there’s still usability, vendor-switching, lack of mindshare in the market and customers are aching for better.  Healthcare still involves a lot of local markets and then with this type of software there is a web opportunity to sell direct to smaller hospitals and physicians.  EHR companies that have earned market share include large and small companies, according to the report:

  • Cerner garnered the top position in the market. The company continues to add new business and add to its services by adding CernerITWorks, a suite of services that improve the ability of hospital IT departments to meet their organization‘s needs. A second example is Cerner RevWorks, which includes solutions and services to help healthcare organizations with their revenue cycle functions.  The company is very strong in the hospital IT market.   The company‘s acquisition of Siemens IT was a major move that influenced advancement of Cerner‘s market share. Its success securing of the Department of Defense EMR contract will also help to move Cerner forward. 
  • McKesson secured the second position in EHR.  McKesson is a large player in the healthcare IT market and therefore is well- positioned to expand its offerings. The company offers a full range of solutions to meet both clinical and business performance needs ranging from medication safety and information access to revenue cycle management, resource utilization and physician adoption of EMRs.  Those offerings include Paragon, Horizon, EHRM, Star and Series. Ambulatory offerings include Practice Partners, Practice Point Plus, Fusion and others.
  • Epic is the third largest electronic medical record vendor, according to the report.  The company is the vendor for Kaiser Permanente and many other large healthcare companies and has many new innovative solutions that are of interest to large hospitals, capturing a significant share of the new business in the EMR market according to the report.   It is anticipated that Epic will continue to gather market share attempting to add to its ambulatory market share as well with two new products, recently launched.
  • Allscripts Healthcare Solutions is the fourth-largest EMR medical records vendor in our report’s analysis.  The company has been in top five position for several years now, and climbed the ladder after its merger with Misys and acquisition of Eclipsys securing significant market share. The acquisition of Eclipsys in September 2010 provided additional ammunition for 2011.  
  • These are the companies to watch, and market position has been pretty solid over the last decade, but it would be a mistake to stay focused on these companies alone. Others, including GE Healthcare, Athenahealth‘s Intersystems, QSI/NextGen, MEDITECH, Greenway, eClinicalWorks  and at least 600 other companies make up the rest of the market.   

In our market calculations, based on end of year 2016, we include all hardware, software and services revenue directly related to electronic medical records.  Services such as consulting and training are a large part of the EMR market, and in its report Kalorama breaks out the exact percentage of each category. 

Greater detail on EHR market share for the smaller firms and exact EMR market percentages of each significant vendor, and their change from last year, is included in Kalorama Information’s report, EMR 2017: Electronic Medical Records in an Era of Disruption, which is available at:  https://www.kaloramainformation.com/EMR-Electronic-Medical-10785187/

What is the Size of the EMR Market?

The size of the electronic medical records market for EMR was $28 billion in 2016 as indicated in our report  It is expected to rise briskly, and the forecast for the EMR market in will be $36.6 billion by 2021.   This according to Kalorama’s analysis of electronic health records system vendors, EMR company annual reports, interviews with executives at top companies in the healthcare IT market and others. 

In its calculation of the electronic medical records market, Kalorama includes revenues for EMR/EHR systems, CPOE systems, and directly related services such as installation, training, servicing, and consulting which are key profit areas for companies.  It does not include PACS or hardware.  The market for electronic health and medical records is matured rapidly, due to the influence of government incentives for the American Recovery and Reinvestment Act of 2009.   The act offered incentives for purchasing and using EMR systems and penalties for physicians submitting paper records to Medicaid or Medicare.  This incentive offered extra payments to physicians and hospitals who prioritized purchasing of EMR faster than they would have otherwise. 

Kalorama Information has covered electronic medical records market in annual reports since 2007.  Over that time, we have analyzed the market and noted changes.  For a decade, the EMR market could be said to be growing market on a predictable trajectory.  There is a great deal of competition, hundreds of scattered companies serving local or web markets, and a few large concerns that are capturing large institutions. There were government funded physician and hospital incentives in the largest market of the United States, which transformed to potential penalties.  

 All the while, some trends we've noted in the report included the depth of physician adoption, user dissatisfaction with their purchases, lack of interoperability, implementation difficulties, staffing shortages in IT, the lack of a clear EMR market leader, increasing international markets, and cyber security.  Additionally, a new administration with a different set of objectives from the Obama Administration that incentivized EMR purchases is in office, potentially changing programs.  Kalorama Information believes that at this time these trends are combining to disrupt the EMR marketplace, even while revenues for companies grow.  

 The electronic medical records market has been fairly stable as incentives (and penalties) presented by 2009 government incentives in the largest market in the United States have ensured a reasonably growing market with good expenditures.  At this point, with EMR purchased by a large number of physicians and hospitals, challenges remain for EMR to fully succeed.  This report takes a look at these trends.  

 What is EMR?

 The electronic medical record (EMR) is a computer-based patient medical record. Over the last 30 years, medical institutions have encouraged the shift towards computerization to help manage patient information. However, the early medical record information systems were not integrated. During the late 1980s, efforts were made to transform these individual laboratory computers into integrated clinical information systems. This meant that information pertaining to the patient‘s test results, including blood chemistry, microbiology, radiology, biopsy reports, etc., could be retrieved from a single terminal. Later, healthcare providers began incorporating parts of the clinical narrative by employing transcription services. Surgical operative notes, discharge notes, summary of the patient‘s medical problems, and lists of their current medications started appearing in the medical information system. 

 So what is an EMR then? An EMR is a specific type of software that ensures retrieval of documentation systems within hospitals or medical institutions and facilitates the following tasks:

  • Easy access of patient data by the clinical staff at any location
  • Automated checks for drug and allergy interaction
  • Clinical notes
  • Prescriptions
  • Retrieval and archiving of laboratory reports and other test results
  • Scheduling of patient visits
  • Claims processing by insurance companies

 It also includes systems that track other relevant medical information.  An EMR system is a clinical IT solution, which broadly encompasses five areas:   Pharmacy Information Systems (PISs), Radiology Information Systems (RISs), Laboratory Information Systems (LISs), Computerized Practitioner Order Entry (CPOE) systems and decision support systems,

As in years past, the EMR industry continued to face many issues in 2016 and 2017 including interoperability, regulations, patient engagement, information blocking, consumer technology growth, security, and a host of other problems. However, the EMR industry is continuing to progress but not without growing pains.  Many challenges face the industry in the coming years - as healthcare as we have known it changes to a value-based system with more patient involvement.

There will be continuation of consolidation leading to a reduction in competition and the danger of monopolization. Mergers and acquisitions are not new to the health IT market but there seems to be an emerging strategy, which is attempting to reach a greater number of healthcare organizations, providers and patients through synergistic pairing.  There will be a heavy regulatory burden facing healthcare professionals with the regulatory changes ahead.

Physicians Frustrated, but EMR Adoption Increases

There has been a growing dissatisfaction among customers with their present EHR vendors and many customers – physicians and hospitals alike, are considering changing vendors.    A recent survey showed that 1 in 6 medical practices are planning to change vendors. This has been mainly due to glitches in the system operation, unfulfilled promises, and unmet expectations in system implementations, support and features.

While gains have been made in physician adoption in EMR systems since we last reported on this topic in early 2016, growth has been slowing and adoption has been uneven.  CMS‘s recent survey also corresponds with numbers from an Accenture study on the same topic that shows over 70% of physicians in the US have used EMR.  This is a significant improvement over 2006 when Kalorama Information first began studying EMR and represents the success of the stimulus incentives in the ARRA stimulus law of 2009. 

In the US, EMR has made significant gains in hospital and health systems.  Demographic studies indicate there is wide variance among physicians in different regions (Physicians in the North US more likely than Eastern US) and age (physicians under 44 more likely). ONC (Office of National Coordinator, part of HHS) data indicate that 82 percent of the office-based physicians used partial or full EMR systems in 2015, an increase from the 57.0 percent reported in 2011. About 51.2 percent of physicians reported that they now have systems that met the criteria of a basic system, though only about 21.2 percent reported having systems that met the criteria for a fully functional system. Physicians increasingly are adopting electronic medical records systems, even before government economic incentives for doing so have kicked in.

However, a survey by the Centers for Disease Control and Prevention also found those doctors were not yet doing a whole lot with the technology. There is a lack of instruction and communication between vendors and physicians as to how to adapt this technology to the doctors‘ specific needs.

The growth rate in physician use of EMR varied from the years 2006 to 2016.  The latter half of the last decade was a high interest period for EMR use among physicians.  However, it does appear that some slowing in the growth rate occurred at a surprising time in 2009, which was the year the Federal government launched incentives for physician use through the ARRA stimulus law. At present, EMR usage is advancing – partially due to the threat of penalties from the government in the form of reduced payments from Medicare and other government payers.

Significant Events in the EMR Market

As we said in a recent press release, the EMR Market is 28 billion dollars.  But that might all be for naught if some pressing trends aren’t resolved.  How much customers spend, what they buy, who owns the market will all depend on how these trends are resolved. 

Competition: The electronic medical records market is competitive, with over 1,000 providers; however, increasing mergers and acquisitions in the industry will result in the reduction in the number of competitors.   Local and country-specific vendors were counted in the total number of EMR providers but were not considered as major players in worldwide market participation.  Companies remain competitive by offering high-quality solution packages to private practices and hospitals.  There are a great number of mergers and acquisitions among EMR providers; these are detailed in Kalorama's report.  

Vendor Switches:   There is approximately a 15 percent switch rate in the EMR market at the present time.  Celebrated cases like Epic and Coast Guard’s fraught vendor contract are common (http://www.healthcareitnews.com/news/how-coast-guards-ugly-epic-ehr-break-played-out)  But McKesson, Meditech and others have also had their share of vendor switches.  http://www.beckershospitalreview.com/healthcare-information-technology/6-ehr-vendor-switches-in-2015.html

AI: Artificial intelligence in healthcare is indeed an exciting new prospect gaining attention and many feel that it is the future of healthcare.  Future prospects include health assistance and medication management, precision medicine applications, drug creation, and helping people make healthier choices and decisions.   

Demands for Service: Customers demand more than just software from vendors.  Customers want vendors to move from merely developing and deploying software packages and maintaining them to implement

Ransomware:   Cybersecurity has always been an issue in the EMR market but Ransomware events have given this topic new importance.  This has especially become a hot topic following the hostage situation of Hollywood Presbyterian Medical Center. On February 5, 2016, the facility was subject to a cyber attack restricting access to electronic health records and interrupting the flow of clinical information. The facility resolved the situation by paying a ransom of $17,000 to obtain a decryption key to restore its data.  This has been alarming for other healthcare facilities, as most are not equipped to handle this kind of attack.  Two smaller healthcare organizations, a three-physician surgical practice and an 18-bed critical-access hospital were hit by ransomware attacks. The latest ransomware attack occurred in Henderson, Kentucky at the Methodist Hospital where a computer virus was discovered that limits the use of electronic web based services. The hospital is working to resolve the issue.   Ransomware has evolved over the last several years and is part of a class of security threats that depend on someone being duped into providing network credentials, primarily through phishing attacks.

Victims usually pay the ransom to make the problem go away, but even that may be questionable as a long-term strategy.   

Future Growth in the Market for EMR Systems

The market for EMR systems continues to grow but at a slower rate, as more physicians and hospitals use EMR and acquire EMR systems, and as hospitals and physician groups upgrade existing systems.  It was not unusual in past reports to forecast a 20% increase in the market per year.  As the market has grown and incentives passed, growth is possible but not at that rate.  Now revenue growth will  range 5-10%.

 EMR switches continue in both the hospital and physician arena due to dissatisfaction with offerings of the current provider, productivity losses and higher costs.

  The Trump Presidency suggests change in government policy towards EMR.   The administration has not detailed specific indicatives regarding EMR but has put in place a HHS secretary and ONC director with physician and industry experience, respectively.  This suggest user-oriented and vendor changes.