• by Bruce Carlson
  • June 5 2017


6 Predictions for The 2017 EMR Market

6 Predictions for The 2017 EMR Market

The market for Electronic Medical Records was $28 billion in 2016, according to Kalorama Information’s most recent report on the market. It is expected to rise to $36.6 billion by 2021. The growth in revenues, and the continued physician adoption and usage of EHR systems, belies fundamental changes that are important for market watchers to know about that could affect the market in one direction or another, and could change who earns the revenue.

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. This is changing:

• Trump Presidency: Change Unknown But Likely
• Frustrated Physicians and Wary Hospitals
• Radical Product Innovations for Accessing EHRs: Dashboard Modules,
   Usability, Tablets, E-Prescribe, Big Data
• EMR Market Trends To Watch: Blockchain, BYOD,
   Artificial Intelligence, Open Source EMR
• Consolidating EMR Companies
• Ransomware and Other Cybersecurity Threats
• MACRA Upends Physician Payments and EHR Incentives
• Significant Bottlenecks To Full EMR Usage Remain

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 cybersecurity. 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.


Physician Dissatisfaction
Physician dissatisfaction with EMR continued to grow as it has for the past four years. recent survey in December of 2016, indicated that approximately 15% of respondents were considering switching their EMR. This percentage was also validated by vendors at HIMSS 2017 through interviews with participants.

According to one study that was done by MPI Group and Medical Economics, nearly three-quarters of physicians described their EHR investment as not worth the effort, resources, and costs. There were varied reasons for the dissatisfaction. Approximately two-thirds (67%) of physicians cited system functionality as the most annoying feature; while 48% were dissatisfied with the cost and another 33% cited poor customer service as their reason for dissatisfaction.



What Could Happen in the EMR Market


It is not clear whether changes to the EHR meaningful use program will be at the top of Rep. Price’s agenda next year. Continued focus on physician adoption. Whatever the administration’s feelings about previous government intervention in the physician practice and healthcare IT market, the gains in adoption of EMR have benefits that cannot be overlooked, and it’s likely the new administration would seek to "hold the gains" in EHR uptake and interoperability. New healthcare policies rolled out under the Trump administration should build on existing technologies for interoperable exchange already integrated into EHRs under the 2014 Certification Program, such as Direct Messaging, eHealthExchange, IHE-XDR and the CCDA – while also supporting development of new technology and evolving standards, such as FHIR, at least one consulting group that spoke to the White House advised not "throwing the baby out with the bathwater."


1. Expect Continued but Slower growth:  Revenue growth will continue at a fast pace, but slower than previous years as major organizations finish conversion. Remaining markets will consist of upgrading, replacing and servicing existing EMR as well as new sales.

2. Continued focus on physician adoption: Whatever the administration’s feelings about previous government intervention in the physician practice and healthcare IT market, the gains in adoption of EMR have benefits that cannot be overlooked, and it’s likely the new administration would seek to "hold the gains" in EHR uptake and interoperability. New healthcare policies rolled out under the Trump administration should build on existing technologies for interoperable exchange already integrated into EHRs under the 2014 Certification Program, such as Direct Messaging, eHealthExchange, IHE-XDR and the CCDA – while also supporting development of new technology and evolving standards, such as FHIR, at least one consulting group that spoke to the White House advised not "throwing the baby out with the bathwater.


3. Increase penalties of data breaches to encourage investment. Due to limited competition and the nature of their services, medical providers and their business associates have little financial incentive to safeguard their patients’ privacy. The only major consequence of breaches are the subsequent OCR audits and the possible penalties. It is therefore probably that OCR will start to create a strong incentive for the healthcare industry to invest in digital security and protect patient privacy by increasing the penalties of data breaches.


4. User Focus: Although every medical provider is now using an Electronic Health Records (EHR) system, physicians are frustrated with their EHR systems, exchanging medical data remains to be a major challenge and cyber-security attacks undermine the privacy of patients more than ever. Many of these challenges could have been addressed in the recently announced rules of Medicare and CHIP Reauthorizations Act (MACRA). However, CMS may have lost an opportunity by making a set of extremely complicated rules that ignore both medical practice and basic economics. For the EMR market to progress, usability must be a focus, and it’s expected that an ONC chair with industry experience will be likely to determine that.


5. Regulatory clarity by 2018: This is the first change in administration since the incentives for EMR began, and so regulation is up in the air. Rules holding healthcare providers accountable for improved outcomes, such as those laid out in MACRA should be made clearer and more targeted. We’d expect that as the federal government works to reduce regulatory and documentation burden as committed to in the health IT provisions of the just-signed 21st Century Cures Act, clarity on issues should be seen by next year.


6. Privatization of VistA Possible But Unlikely: The IAC was tasked by VA leadership last fall to make recommendations on ways to improve the VistA system, which runs at 153 VA hospitals and more than 700 clinics. For the VA to abandon the VistA code base, which community members see as a waste of a public investment. A work group of the Industry Advisory Council, or IAC, of the not-for-profit American Council for Technology released on a 101-page report in April 2017. Privatization is one possibility. This is possible but still unlikely. Particularly, replacing open VistA modules with proprietary, commercial off-the-shelf, or COTS, software products will not be favored by the users. Traditional VistA development has allowed for more physician-programmer interchange than many commercial software systems.


The Market Impact of Potential Changes
The following table lists a series of potential changes and the impact that Kalorama Information believes could occur in the EMR market.

Potential Event

EMR Market Impact

Trump Admin Potential Polices

Further Delay of MU Requiremets

Slower market growth in ambulatory EMR market as physicians reduce pace of implementation.

Removal of MACRA Penalties

Slightly helpful to market as physician payments clearer; Benefit to small EMR Players who cannot implement MACRA

Insistence on Implementation of MACRA

Benefit to Top 10-15 Vendors Who Can Implement MACRA: Physician Customers May Put Price Pressure on Ambulatory EMR Market

Radical Steps

 

Heavy Hand on Cyber Threats: High Fines

Benefit to Top 10-15 EMR Vendors who can implement cybersecurity increase in service segment of EMR market

Allow Monetize Patient Data

Overall Benefit to Market as EMR is monetized; Benefit to Top 10-15 EMR; vendor price and fees increase  

Non Policy Events

 

Same amount of Ransomware Attacks

Stable Growth as Expected

Large (10x-20x) increase in Ransomware Attacks

Slightly higher market growth as service fees increase and hospitals devote more budget to security.  Increased partnership / M&A particularly with cybersecurity expert firms

Increase in Healthcare IT Budgets

Large institutional market growth

Same healthcare IT budgets (6-8%)

Stable Growth as Expected

More of these situations are detailed in Kalorama Information's market research report, EMR 2017.