EHR Vendor Consolidation

What happened in the M&A arena had interesting ramifications, but what didn’t happen might be equally significant: The overcrowded electronic health records market didn’t consolidate.

Well over 200 EHR vendors are fighting for meaningful use business. How crowded is the field? As of mid-April, the federal government lists 393 Complete or Modular certified ambulatory EHR products, along with 182 certified inpatient Complete or Modular products.

There were several good reasons for the non-event, but consolidation’s got to come soon, says Rob Tholemeier, senior research analyst at Crosstree Capital Partners, a Tampa-based corporate financial advisory firm. “There has never in the history of software been 200-plus companies selling similar functionality,” he notes. “Less than a dozen-maybe a dozen at most-will survive.” –Source

I always find these reports on the EHR market fascinating. I’ve done some analyst work for a few companies that are looking at the EhR market. I should probably do more since it’s pretty fun to be able to provide investors a view at what I see happening in the EMR and EHR market.

I agree with the above statement that it’s been a little bit surprising that we haven’t seen more consolidation in the EHR market. I think we can all agree that there are far too many EHR vendors out there right now. I’m all about competition, but this many competitors makes it really hard for the clinician to choose an EHR. Certainly this is going to change.

The above linked article suggests that most of the EHR consolidation would be through attrition instead of acquisition. I don’t totally agree with this theory. There will be a nice mix of both. Although, I believe that acquisition of EHR vendors will actually be more common than EMR vendors shutting down the business.

Plus, while we will see some consolidation, I totally disagree with the above quoted articles assertion that the EHR market will consolidate down to “a dozen at most” EHR vendors. I’ll be surprised if we get down to 100 different EHR vendors. The SaaS EHR vendor business model just doesn’t need that many doctors using their system to work. Unlike many other industries, I think that there’s a whole set of very conservative EHR vendors who can run their business very well with a small subset of providers.

Of course these EHR vendors are always looking to grow, but I see many of these companies ready for the long EHR grind. They’ve been very conservative in their approaches and can last a very long time with their current EHR user base. Many aren’t even trained in the thinking of how to exit the business. They’re entrenched and ready for a long battle. So, while we’ll see some consolidation of the EHR industry, don’t believe these analysts that are predicting a massive consolidation to a handful of companies.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the, 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,, 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.


  • Your thoughts are pretty much right John. Add to this, the need for local touch and feel, the warm and fuzzy that the local EHR Vendors can provide also makes it attractive to the Physicians.
    We are talking about small businesses – which are the solo and 2 to 3 Physician practices.
    SaaS providers do operate conservatively and can survive, maintain, enhance and grow with a smaller base of clients – as low as 1000.
    I also agree that this might come down to 100+ vendors over the next 3 years when the MU Phase II comes into play.

  • John, I agree that more consolidation is inevitable, especially as hospitals and other provider organizations (including physician practices) merge or otherwise ally to form ACO or ACO-like organizations. Typically (in healthcare and in other industries) when mergers occur, the surviving entity will rationalize the various systems and vendors used by the individual entities and select a small number of systems/vendors to use going forward. Ideally, they’ll select the better and more innovative vendors that can help them adapt to changes in the healthcare economy.

    Re: attrition or acquisition, acquisition often equates to attrition when the acquirer buys a competitor primarily for its customer base & technical staff and ultimately discontinues the target company’s product line.

    Re: number of surviving EHR vendors, I tend to agree that it will be higher than a dozen or so, at least in the medium-term. Healthcare is still very regional and specialized and I predict that it will be a long time before we see as few as a dozen EHR vendors

  • Anthony,
    I’d say most SaaS can operate on even less than 1000. At 1000 they can start looking at selling.

    Good point about the regional-ness (is that a word?) of healthcare. That’s another contributing factor to it for sure.

  • M&A within the EMR/EHR industry is a factor if the merged or acquired entities bring increased value to the whole. Bigger component may be client consolidations. In any case it is best to ensure you protect your value because the alternative is not appealing.

    An at risk application vendor unable to sustain a client base strong enough to sustain it is not as likely attract a buyout offer. The stronger developer will be more inclined to let the opposition die and then step into bringing on new clients as opposed to buying the at risk vendor and taking on the engineering cost of walking the clients to its application.

    Stronger developers with a strong client base are more lucrative targets as the existing client base provides the marginal funding for the engineering to walk those clients over to a new package.
    Actions by RECs who “picked winners early” through there middleman actions disrupt the free market, hinder innovation since winners don’t have to innovate, and emerging developers with new and good solutions are kept out of the conversation between RECs and practices.

    IMO of greater impact as Janice intimated will be due to larger secondary systems acquiring independent PCPs and then driving their new clinics to a common EMR solution to gain a greater scale in savings even if dumping existing disparate EMR solutions those clinics had previously adopted even if it means starting its implementation over… even when the application the acquired PCPs had adopted was superior to what the “big box” vendors sold the hospital systems.

    Bottom line … small in subscription inefficient vendors will be squeezed out by larger entities able to offer more for less. Larger developers will merge or acquire one another to the point that there is value in expanding the client list at a cost below the ROI target. As much as competition, mergers and acquisitions of developers will work to reduce the number in the market the consolidation of the independent client base may have a greater impact on the EMR industry.

    As Rob Tholemeier is quoted above: “There has never in the history of software been 200-plus companies selling similar functionality,” he notes. “Less than a dozen-maybe a dozen at most-will survive.” Consider that in the UK with a far more mature EMR landscape there are but a handful of EMR providers with Egton Medical Information Systems (EMIS) has well over half of the private GP market.

    If there are going to be a dozen companies in this business when the U.S. market reaches the UK’s maturity … who will they be? If my company isn’t projected to be one of them … I’m going to want to make sure that we remain valuable and a target because if I go BK then there is no value in a larger company acquiring me.

  • It was definitely eye-opening my first year at HIMSS to meet vendors in huge exhibit hall booths who claimed one or two clients only (I believe one had a replica Delorean from Back to the Future on display). Of course, the hospital space is much different than ambulatory.

  • We see the number of EHR vendors as a challenge for clients in that with client merger, acquisition and consolidation, the healthcare information system mosaic conundrum comes into play:

    Namely, as part of their acquisitions, if they choose not to convert systems, these organizations are forced to support multiple systems and vendors that might not necessarily be interoperable.

  • Justin,
    I love your “mosaic” image. Do you mind if I use the image in a future post on one of my sites? I’ll link back to the original post. I love the story that the image tells.


  • John,

    If the 600 number (393+182) is comprised of significant, independent, legitimate HIT dev teams, that number is truly astounding. Could be some or many are resellers in some fashion. In any event, the number is still monster.

    There are a few credible EMR directories that include non-ONC systems. Based on these directories and other info, I estimate the active players in the marketplace at 800.

    I’m in touch with most of the major and mid-sized global software development houses on at least a monthly basis. Based on what I see and hear, plus other info, I estimate total number of vendors with systems in the air, on the runway, or taxiing, to be 8000. This includes everything EHR related in some way – PHR, EMR, EHR, HIE, telemed, etc., or some sub-slice.

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