Will Hospital EMR Prices Fall Anytime Soon? Maybe Not.

Today, I spoke with a vendor who sells an EMR to medical practices. In his market niche, he says, prices have begun to drop as competition for business intensifies.  Not too surprising to hear, given that there’s hundreds of vendors competing for the same customers.

On the other hand, hospital EMR prices haven’t fallen in recent times as far as I know. That, isn’t very surprising either, given that demand is still high and the cost of doing without an EMR increasingly high as well.  Not only that, big EMR vendors with well-known names canexploit the fear factor (i.e. fear that if you buy a cheap EMR and it fails, you’ll be out of a job).

My question is, when will hospital EMR prices start to slip?  As with any product lifecycle, there’s a stage where vendors with a super-hot EMR can demand the moon, but won’t there come a time when CIOs start to say “nah, your 20% cheaper competitor can do the job”?

Unfortunately, I think that point will be a long time in coming, for reasons that include the following:

*  Complexity:  Let’s face it, hospital EMRs are complicated beasts, and it’s going to be a long time before CIOs feel totally confident that they know what they’re buying. So it’ll be more important for the EMR to *seem* impressive. My theory is that as long as they’re forced to rely on the “dazzle” factor that impresses boards and CEOs, CIOs will be glad to pay a big price for the right system.

* Immature market:  Economic theory suggests that as markets mature, prices fall, as core feature sets become accepted and differences between products seem less important. Right now, though, the hospital EMR industry is quite immature — after all, has anyone created the canonical definition of what a hospital EMR must include? — and vendors can exploit those differences to keep prices sky-high.

* Meaningful Use:  Yeah, that’s right, the MU incentive dollars we all love so much are creating price inflation. Duh! If you pump $20 billion into a market and people have more to spend, vendors will be only too happy to take it away from you.

I could go on, but I’m sure you get the idea. Until the market sorts itself out, IT leaders have years of EMR experience under their belts, and the period of incentive-driven investment dies down, we’ll have nothing like a natural price for hospital EMRs.  Hey, if you think I’m wrong about this, tell me. I don’t want to be right.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.