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.

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