It all began with a question, as many classic tales do. Someone writing for the HIStalk.com website – I think it was ever-anonymous, eponymous leader Mr. HISTalk – asked readers to answer the question “Who will benefit most from the proposed acquisition of McKesson EIS by Allscripts?”
The survey results were themselves worth a read:
* Approximately 29% voted for “McKesson customers”
* About 27% voted for “Allscripts customers”
* 8.4% voted for “McKesson shareholders”
* Roughly 23% voted for “Allscripts shareholders”
* About 13% voted for “Allscripts competitors”
Two things about these responses interested me. One is that almost a third of respondents seem to think McKesson will make the bigger score after being acquired by Allscripts. The other is that a not-inconsiderable 13% of the site’s well-informed readers think the deal will help Allscripts’ competitors. If these readers are right, perhaps Allscripts should rethink the deal.
I was even more engaged by the analysis that followed, which the writer took a close look at the dynamics of the hospital EMR market and commented on how Allscripts fit in. The results weren’t surprising, but again, if I were running Allscripts I’d take the following discussion seriously.
After working with data supplied by Blain Newton, EVP of HIMSS Analytics, the writer drew some firm conclusions. Here are some of the observations he shared:
- While McKesson has twice as many hospitals as Allscripts, most of these hospitals have less than 150 beds, which means that the acquisition may offer less benefit, he suggests.
- In addition to having only 3% of hospitals overall, Allscripts controls only 6% of the 250+ bed hospital market, which probably doesn’t position it for success. In contrast, he notes, Epic controls 20% of this market and Meditech 19%.
- His sense is that while hospitals typically want a full suite of products when they work with Epic, Cerner or Meditech, Allscripts customers may be more prone to buying just a few key systems.
- Ultimately, he argues, Cerner, Epic and Meditech have a commanding lead in this market, for reasons which include that the three are well ahead when it comes to the overall number of hospital served.
- Given his premise, he believes that Epic is at the top of the pyramid, as it has almost double the number of hospitals with 500+ beds that Cerner does.
To cap off his analysis, Mr. HISTalk concludes that market forces make it unlikely that a dark horse will squeeze out one of the top hospital EMR vendors: “Everybody else is eating their dust and likely to lose business due to hospital consolidation and a shift toward the most successful vendors as much as all of us who – for our own reasons – wish that weren’t the case.”
It would take a separate analysis to predict whether the top three hospital EMR vendors are likely to win out over each other, but Epic seems to hold the most cards. Last year, I wrote a piece suggesting that Cerner was edging up on Epic, but I’m not sure whether or not my logic still holds. Epic may indeed be King of the (HIT) Universe for the foreseeable future.