Free EHR Model Has Bent the EHR Cost Curve

Posted on September 7, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

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.