Reshuffling of Ambulatory Physicians Favors Large EHR Vendors

She [Nancy Fabozzi, a senior industry analyst at Frost & Sullivan] said many physician practices are facing financial difficulties and the result is physicians are increasingly selling their practices to hospitals, entering into joint ventures with hospitals, or joining larger group practices.

“This whole reshuffling and realignment among ambulatory physicians is going to have a huge impact on the vendor market because many of these 300 vendors that we talk about are a lot of mom and pop EHR companies that have under a million dollars in sales annually,” Fabozzi said.

She added that if physician practices are going to be a part of a big hospital network or a large medical practice group they are going to buy EHR products from larger vendors.

It’s been becoming pretty clear that many small physician offices are selling off to hospitals or larger group practices. This consolidation has been going on for a while and really is going to change the healthcare industry in dramatic ways. I agree with Nancy Fabozzi quoted by Information Week above, that this consolidation favors the EHR Software that comes from larger EHR vendors. Right or wrong, hospital and large group practices generally select the larger EHR vendors.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

5 Comments

  • I also agree that the larger vendors like Allscripts will be at an advantage with hospital or large medical practice groups buy up smaller groups. In our business, IT support for medical practices, we see most larger groups selecting EMR companies that have a large install base and strong financial backing.

  • Tech Pro,
    Glad to see you agree. Although, I should clarify (as I’ve done in previous posts) that larger doesn’t always mean more stable or more secure. Some look like they have strong financial backing, but large EHR vendors can quickly burn through money and might be less financially viable than their smaller EHR competitors.

    I think the saying that goes something like, “No one gets fired for buying IBM” applies here.

  • Yes John; no CIO has been fired for choosing IBM. Risk averse with limited upside. Coming from the Financial IT sector, and having worked in mid size services companies, have had the chance to compete against the ‘big’ boys and in 10 to 20% of the cases we were able to win against the big boys, by paying attention to client’s requirements and attending to them. Not that IBM/HP etc., cannot do it; sometimes the commercials do not make sense to them and they hae to make the best bang for the buck. Its about opportunity cost at the end of the day.
    In the ambulatory care setting, although there might be consolidation, the 1 to 9 physician clinics are here and will be here for the near future, although they might reduce in number. These providers need the attention, which, due to the opportunity cost, the bigger players might ignore or depute the resellers to attend. This is where the smaller EHR vendors, will be able to pick up the crumbs and make a business out of it. That’s exactly what we are doing and it has been successful. Going that extra mile to follow up with the labs for the interface, following through till the interface is established, connect the MRI center where necessary, make the necessary modifications and customizations required, add templates required by te Physician with minimal or no additional cost knowing fully well that the global set of templates will be an asset in the future, establishing interfaces with OEMs including CVIS Vendors, UltraSound Vendors, RISs………. these are few things that the smaller companies can do well and earn the business through referrals resulting from exemplary service.
    There is a market for the smaller vendors. Few of them will probably be marginalized; and those that can acquire a portfolio of 1000+ Clinics will be financially viable in the long run.
    And mind you, the market is led by US and already the emerging markets are falling in line. Similar to what happened in the financial sector, the health IT is also emulated in emerging markets.
    These are some of my thoughts!!!!!!!!!!!!!

  • Anthony,
    I agree that there’s a good space for smaller EHR vendors. Just they have a bunch of challenges in front of them. However, if you subscribe to my theory of 50 EMR markets instead of 1 (ie. 1 market per specialty) then there are going to be a lot of successful EHR vendors thanks to all those various niche markets where an EHR vendor can dominate. Then, eventually they’ll get eaten up by a larger company, but the product will remain niche (most of the time).

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