Reasons for EHR Market Failure According to ONC Director Mostashari

In the write up of the Farzad Mostashari closing keynote of the Government Health IT conference in Washington, Tom Sullivan provided the following summary and quote (emphasis mine):

Competition is a wonderful thing, said Mostashari, but “classic causes of market failure,” in this instance prohibitively high switching costs, vendor or data lock-in, among others, weaken the competitive landscape.

“We need to create a better marketplace,” he said. “We want as little government involvement as possible, but no less.”

These two items are worth considering when it comes to an EHR selection and implementation: prohibitively high switching costs and vendor or data lock-in.

I think I might have to write some future posts on these topics and possible other reasons that the EHR market has issues. For example, a clear way to differentiate EMR products seems like another EMR market failure.

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.

1 Comment

  • Regarding Mostashari’s assertion: [Competition is a wonderful thing, but classic causes of market failure, in this instance prohibitively high switching costs, vendor or data lock-in, among others, weaken the competitive landscape. We need to create a better marketplace. We want as little government involvement as possible, but no less.]

    That’s crap!

    The market has not failed. The market has done just exactly what the market is supposed to do. Just because this market is slow evolve does not mean that it is broken or has failed. It has and is winnowing and rejecting enterprises that cannot survive and thrive on the basis of their proposed value proposition. Those enterprises do not deserve to survive. At best, a small subset gets rolled into and nourishes the more adept competitors. As painful as it is for both customers and vendors, the rest need to go into dust heap.

    High switching costs, vendor/data lock-in, and other “features” that EHR/PM consumers currently confront is just a part of the natural order of markets, particularly when it comes to technology. It is a necessary and essential cost of technology evolution and adoption that should NOT be tampered with. Everyone reading this who has worked with technology for more than a couple of years has seen this over and over and over and over again. It is the organic and evolutionary nature of applying and rolling technology to industries and businesses. At the early stages, there is no consensus among buyers; there is no commonality among sellers. They are all pioneers. There is an old saying in technology, “How do you know the pioneers? They’re the ones face down in the dirt with arrows in their backs.”

    At this point in time, it seems that EHR/PM is still in the innovation/early adopter stage of a market. That means that there will be winners and losers, both customers and vendors. Government cannot “make it better”, it can only distort the outcome and make it difficult for contenders to figure out the kabuki dance that gets us onto the steep upslope of adoption.

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