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The Current Health IT and EHR Bubble

Posted on May 16, 2012 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.

I had a really great conversation with Shahid Shah, Jenny Laurello and John Moore at Health 2.0 about the bubble that we’re sitting in right now. John Moore’s response to my question, “When do you think the bubble will pop?” was priceless: “Which bubble?” Yes, we might be seeing multiple bubbles in healthcare IT: EHR, HIE, mobile health, etc.

For this blog, I’m most interested in the EHR bubble. Obviously, the bubble in this case is the creation of the $36 billion in EHR stimulus money that’s being handed out thanks to ARRA and the HITECH act. With over 600+ EHR vendors and a limited number of customers (I think there’s about 700,000 physicians in the US), there are going to be quite a few EHR vendors that won’t make it.

With that said, I don’t think the EHR bubble will pop like it has in other industries. In fact, I think the current IT industry bubble is going to be a much bigger problem. What’s amazing to me is how you can make a decent EHR business with only a few hundred doctors. Sure, a few hundred doctors won’t create 10 times return to investors, but those who take a conservative approach to building their EHR company could get by with what I believe is an astoundingly small customer base. Physicians are just that valuable.

Shahid Shah described EHR as a cottage industry and so cottage EHR companies will survive. I’m not exactly sure how he’d described cottage industry, but I think the regional nature of healthcare is definitely an influence on this. I’m sure many could argue that long term this strategy won’t work, but I believe at least for the forseeable future we’re not going to see the EHR bubble pop for a while.

As I think about the EHR companies I know, they all seem to have plenty of cash to make it through meaningful use stage 2 and likely all the way to meaningful use stage 3 at least. We’ll see how the smaller EHR companies do post meaningful use stage 2, but I don’t see any EHR vendors not making it to meaningful use stage 2. They’ll at least make it to MU stage 2. Then, based on their adoption results (or not) we may see a few EHR vendors run out of money.

What do you think? Are we in an EHR bubble? When will the EHR bubble pop? What other healthcare IT bubbles do you see?

IPO Window Open for EHR Vendors

Posted on July 19, 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.

I’m pretty sure that many readers of this site haven’t found my new EMR related website called EMR and EHR Thoughts and so you might have missed the post I did about Greenway Medical filing to go public. This is obviously big news for Greenway, but I also think it’s a sign of things to come. I believe that Greenway is likely the first of many EHR companies that we’ll see go public over the next year or so.

I’m sure that many of you haven’t followed the trends of tech company IPO’s and I’m far from an expert on this. However, the IPO window which was generally closed for tech companies now seems to be open after a number of successful public offerings from tech companies. I’m not sure why it took me so long to realize this, but I believe that we’re going to see a number of IPO’s from the larger privately held EHR companies during this period as well (Don’t be surprised if even Epic can’t resist).

Many people in silicon valley are suggesting that we’re in a startup internet bubble that in some ways is similar to the initial dot com (or bomb if you prefer) bubble. When you look at startup company valuations, I believe this is definitely the case. In some similar ways, we are also in an EHR bubble. However, I don’t believe this EHR bubble is going to pop for a couple years.

The obvious reason we’re in an EHR bubble is the EHR stimulus money. That’s going to continue to hold the EHR bubble up for at least another 2-3 years. Then, the real fun (or sadness depending on your position) is going to start to set in. However, until then HIMSS, MGMA and other EHR related conferences are going to have some really great parties.

We’ll see what the post EHR bubble looks like, but I can see a number of EHR companies enjoying the benefits of an IPO during the current bubble.