The EHR Bubble Will Pop – To the Victor Go the Spoils

Like the dot-com bubble, the EHR bubble—nurtured by the government incentives—will not last. As I look at what’s happening in the market, it becomes apparent that at some point in the not-too-distant future, the EHR bubble will pop and many vendors will face financial challenges that will lead to their demise.

Several market factors will come into play, including:

  • Physician dissatisfaction with their choice of EHR, which likely was selected in haste to meet the government’s incentive timetable and was delivered by an overwhelmed vendor;
  • Physician disenchantment with the EHR Incentives Program, as financial rewards decrease while requirements intensify;
  • An overabundance of EHR vendors  competing in a market dominated by a small number of major players. (Currently there are 472 EHR vendors offering certified “Complete EHRs”)

To understand how these factors will affect EHR vendors, it is important to understand how such companies typically raise money and what kind of “hockey-stick” growth projections they made to attract investors.

EHR Revenue

Missed growth projections; continued expenses for implementation, support, and ongoing upgrades; and diminishing government incentives will leave many companies unable to find investors willing to fund their future growth.

There will be market consolidation, and financially strong companies will acquire distressed companies for pennies on the dollar.

…To read the full story, see HIStalk Readers Write.

6 Responses to “The EHR Bubble Will Pop – To the Victor Go the Spoils”

  1. Byron Tabbut January 20, 2012

    Evan
    Thanks for an excellent article. I think your analysis is right.
    We are still looking for a new practice management software platform to replace what we have been using for years. If you hear of some that stand out in your mind and stand a good chance of surviving this bubble let me know. I respect your opinion highly.
    Byron

  2. You bring up some excellent points about avoiding the inevitable shakeout among all those 472 (and growing) vendors. I know many who are confused and worry about making a bad decision.

    Mark

  3. 472 vendors is difficult to sort through. Besides a few corprately sponsored sites, I can find no information about performance of specific EMR programs online. Is there any online source of such material? I find it strange that few so comment specifically on individual products.

  4. Steve McDermott January 22, 2012

    I agree 100% the truth will come out and truely profitable EMR companies will win and the the ones using the gov ramp up for an good old 80′s style pump and dump stock play will lose.. Be scared be very scared.

    Steve Mc

  5. I am a bit taken back by the change in the EMR business. I started using a nice EMR about 8 years ago. It is a great product, a great company and at a great price. I had not updated the software since I purchased it. There was no need; the produce worked perfectly for our needs. Now we are looking at upgrading the product to the newer version and it has jumped in price from $300 to well over $5000 and a $100 monthly fee. I can’t believe the price is like that! I blame the certification process. I’m sure it is pretty spendy to get certified in order to qualify for the incentive money and that cost be being passed along to us. Of course the EMR developers think we will all be able to recoop our costs with the incentive money. But we see so few Medicare and no Medicaid that we won’t get any incentive dollars. So we are stuck in the system. Meaningful Use and turned into Meaningless Abuse.

  6. Physician dissatisfaction with their choice of EHR, which likely was selected in haste to meet the government’s incentive timetable and was delivered by an overwhelmed vendor.

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