What’s the Economic Model for EHR?

At the end of my recent EHR workshop in Dubai, one of the attendees asked the question “What’s the economic model for EHR?” I thought this was an interesting question since we’d spent a lot of time talking about the benefits of EHR during the workshop. I talked to him after the workshop and he clarified his question to talk about how they were able to get funding for the EHR project up front, but they were trying to figure out how to pay for the ongoing maintenance and upkeep of the EHR system.

I do believe that there are unique financial models in many countries. So, let’s set those aside for a minute since I think you really have to talk about those details based on each region. Instead, in the moment I gave him a much more general response that is worth considering.

I responded to his question with my own question, “What’s the economic model for electricity?” Of course, I could have asked the same question for water, the cleaning people, beds, etc etc etc. I think the same thing applies to the EHR. Every healthcare organization is going to need one just like they need water and electricity to function. The business model for them is you can’t see and take care of patients without it.

We’re not there yet with EHR, but I believe we’ll get there. I believe that the EHR and the companies which connect to and use the data will make it so you can’t properly see a patient without those tools. Sure, you might be able to make do in an emergency situation, but that’s an emergency. I believe the standard of care for many diseases, many care situations is going to require technology that interacts with the data in the EHR.

Personally, I can’t wait until this is the case. That will mean that we’ve built the technologies that facilitate a new level of care that wasn’t possible without technology. That’s a powerful concept and what we wish EHR software would already do. I think we’ll get there. What do you think?

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.


  • The primary purpose or driving force for EHR has been Government Stimulus Money. Before that and even now, it is mostly Venture Capital. Over 65% of the companies on the market are living off of investors and not on Cash Flow from Sales. That said, the EHR industry was dwindeling, with less then 80 real vendors 8 years ago. Now there are over 800 companies involved in this space.

    THE GOVERNMENT STIMULUS VIA MEANINGFUL USE STAYED THE INDUSTRY AND CREATED THIS GROWTH. Providers will now have no money left, clearly they distributed to vendors and to the partnership by this time. What will be left is exorbitant IT Costs and lots of management and audit costs.

    My prediction, and I am not a new to the party. Of the 800 vendors, the money from Government and Venture Capital will dry up. They will dwindle back down to 150 or so. Providers, frustrated with Software and no longer giving a crap about the Government Requirements will move on to Feature/Function, where they were before the stimulus, and this will once again stimulate innovation, the key to end user satisfaction. Unfortunately, it is already happening, unless the practice is large enough or has a big enough need for Chart Access Electronically, many providers will go back to charts, which had a limited cost compared to Sky Rocketing IT Costs, going up year after year.

    My 2 cents worth. So for those of us in the industry, we need to get back to Features for the Users, not Features for the Government. I believe that is the best by product of the end of the stimulus money that save our industry to many companies.

  • Healthcare can be practiced with “paper only”. I know, I’ve been there. One can give very good care with “paper only”.

    I agree with Brendon regarding the main stimulus for EHR is government stimulus money and/or avoidance of government penalties.

    If EHRs are so good, why would anyone need a financial incentive to buy one? As I’ve mentioned before, take away the incentive money and see how many people buy EHRs.

    Has digitalization made airlines more efficient?

  • Hi John,

    Brandon Holt and SGC make excellent points. There was a tremendous opportunity for EHRs to provide better care at a lower cost and we squandered that opportunity by burdening the technology with government requirements, industry regulations and the above-mentioned incentives that skewed the value.

    I was the biggest proponent of EHRs in the world, as you know. The value prop or economic justification is the fact that, done well, you can get all the patient data in one place (including dental, vision, mental health, etc because they all impact the patient) available everywhere to treat the patient based on all the information the first time, little duplication of tests and guessing. Think of the savings. Of course, you need all EHRs able to “talk” to each other, and that’s another subject “interoperability”.

    On the back end, all that good, valuable, accurate data would be available for research so when a patient presents with symptoms, their condition would be entered into the db and algorithms would spit back best tx options. Also, that research (de-identified and aggregated, of course) would be used to support – or not- novel therapies. We’d know which tx/drugs worked best in which patients under what conditions.

    That’s the dream.

    For the reality, see the other posters. Also, I ran into a great blog by Dr. Edward Schloss this week with his perspective on the actual value of EHRs to medicine and he attributes most of their function to supporting the regulations that surround them. Here’s a link to his blog for those who’d like to see his cool Venn diagram:


    I wrote about it in my Health System Ed blog this week, but you can go directly to his entire article at the link.

    So much promise…


  • It is true the vision for the EHR and the reality are not consistent A fundamental problem is not the EHR itself but how is lack the interoperability and frictionless exchange of information that fuels its higher value. As we move towards value based care, rich data exchange will be come a requirement vs a nice to have. So I believe the EHR has an important and expanding role as we open up data interlop and exchange, and will be complimented by a host of integrated value added applications that are targeted at specific care models such as bundled care and care management. As for the ultimate business model, the EHR is central to value based care operations and risk management so it has a long life ahead of it.

  • Brendon,
    I agree that we need to get back to Features for the Users and not Features for the government. That would change end users experience with EHR dramatically.

    Many doctors did buy EHR before the stimulus. In fact, I believe they are still the happiest EHR users. There is a value proposition for EHR, but the stimulus has muddied those waters and ruined it for many.

    Also, I agree that you can practice medicine on paper today. However, I was arguing that as the delivery of medicine evolves and as technology improves, will that still be the case? I think you’ll need technology that’s connected to EHR data to practice medicine in the future. At least if you want to provide the best quality of care.

    Great link. I agree that EHR software isn’t usually to blame for inefficiency (although sometimes it is). The link blames it on healthcare delivery, regulatory compliance and malpractice avoidance. I think those things really have damaged documentation and ruined the experience of having an EHR. I’ve asked before if a beautiful EHR can be built in this awful environment.

    Dr. Tom,
    I’m hopeful that the changes you talk about will push us there. I do fear that these regulations and reimbursement changes will just complicate things even worse. So, yes you’ll need an EHR, but not for good reasons.

Click here to post a comment