Free EHR Model Has Bent the EHR Cost Curve

One of the most fascinating people I met on my recent trip to San Francisco was a doctor named Aaron Blackledge from @CarePractice. We spent a great evening together talking EMR, healthcare and entrepreneurship in general. You may also remember me posting about Aaron drinking the CareCloud EHR kool-aid (See also an opposing view of CareCloud and my thoughts after seeing CareCloud), but I digress.

Dr. Blackledge has posted a thoughtful look at how the EHR cost curve has changed over the past few years. It’s an interesting read for those looking for an interesting take from a physician in Silicon Valley and his idea of the value of a widely adopted platform.

I love the idea of a healthcare/EMR platform. Would you rather be a $100 million EMR company or a billion dollar platform company? Think those numbers are exaggerations? That’s the question that SalesForce.com basically answered. They could have easily become a $100 million CRM company, but instead they’re now a multi billion dollar platform company. I won’t be surprised if we see the same happen for some company in healthcare.

Whether you agree or not on the value of a widely adopted platform, one thing is certain: The Free EHR Model (with Practice Fusion as the first to make the big “free EHR” splash) has absolutely brought the cost of EHR down. I’m sure there were some other forces at play too, but I believe the Free EHR model held everyone else accountable for their pricing.

As Dr. Blackledge says in his post, little by little EHR vendors couldn’t get away with charging $20,000 per user up front for an EHR. I started blogging about EMR when this was the norm. Most clinics would take out a hefty loan to buy their $100,000+ EMR software. It was a scary idea and certainly burnt a lot of physician bridges along the way.

Along came a new pricing model where a doctor could pay a small fee per month. Sure, if you evaluated that amount over 5 years it was still a fair amount of money, but no longer were doctors on the hook for the entire amount even if the EMR software failed to deliver on their promises. Plus, the EMR vendor couldn’t come back later and charge them even more money for future upgrades (that’s right…$20k up front and then amazing upgrade fees).

After that, the Free EHR model made a big splash. While certainly viewed with a fair amount of skepticism (myself included), many other industries are proving this model and doing quite well. We still have a ways to go to see which company is going to be able to execute the Free EHR model, but as I discussed in my recent Pharmacy Ads and Free EHR software post there are a lot of pharmaceutical marketing dollars on the table.

Reminds me of the favorite thing my Dell sales and marketing guy loved to say, “Whether you go with Dell or not, we’re keeping prices low so that everyone else has to offer you lower prices.” I believe Free EHR companies have had that same effect on the EHR industry.

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.

3 Comments

  • In 2008 I went to Microsoft in Redmond, WA for a users group meeting and interviewed Dr. Bill Crounse, worldwide health senior director. He talked about EHRs becoming much more affordable and said a change was coming and physicians would someday only have to pay $1K each for EHR. I have to admit that I didn’t know what he meant at the time and I’m still not sure if he meant free commercial EHRs, or VistA, or the government EHR incentive plan or billing companies providing free EHR software to billing customers, or something I don’t even know about yet, but he really made me think in a different way. I used to think WalMart selling EMRs was a great idea because it bent the cost curve. Maybe the next iteration will be the EHR that we each carry with us invisibly, like an aura. Bones, take this EHR to sick bay!

  • Mary,
    There’s certainly a number of different options available to help lower the cost of EHR. I heard one EHR vendor describe EHR software as a commodity. It’s an interesting thought to consider.

  • Let us not forget the transition that has occurred:
    Docs used to just have a practice management system and it was very easy to show an ROI.

    Now, we have either a PM & an EHR glommed into one OR two separate systems.

    Unless you are standing up a PM for the first time (whether as part of a new EHR or on its own) ROI is next to impossible to calculate.

    A pure EHR just doesn’t have an ROI – sure you can argue you saved a salary, or canned the transcriber – but with the additional work load on the doc, and other staff and increase computer costs…well, that math gets challenging.

    We also have a medical industry where reimbursements to physicians have tanked over the years, so they are no longer that “cash cow”.

    If you talk to a non-free EHR, they scoff at the idea of a free EHR actually being competition. Sure, they are causing some price pressure, but the real price pressure comes from the slew of paid EHRs that have come out of every corner in recent years.

    As an aside – the idea of ads, geared toward the doc – on an EHR just seems out of place to my pea-brain. I mean, really, while sitting there with a patient, is the doc expected to click on an ad and go to some website to maybe make a purchase?

    Maybe the software in airplanes could be made free by including ads on the screens in front of the pilots – if it doesn’t distract docs, surely it won’t distract the pilots.

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