Next up in our evaluation of the various end of 2011 Health IT lists series is one that takes a bit of a look back at 2011. In this list, PwC lists what they consider the Top Health Industry Issues of 2011. The list starts with an interesting comment about the health IT spending in 2011:

More than $88.6 billion was spent by providers in 2010 on developing and implementing electronic health records (EHRs), health information exchanges (HIEs) and other initiatives. This surge is a sign of technology’s critical place in health system improvement.

$88.6 billion is a lot of health IT spending and larger than most numbers I’ve seen. Although, most numbers I’ve seen are only the EMR and EHR market and doesn’t include HIE spending and other healthcare IT initiatives. It’s quite clear that the health IT spending is up, and up Big!

Their list of top Health issues isn’t that surprising, except possibly one of them:

Meaningful Use – This has to be topic number one for health IT in 2011. It’s had a trans formative effect on healthcare IT and EMR and EHR as we know them. Pretty much every EHR vendor I’ve talked to basically had to take an entire software development life cycle to meet the meaningful use and certified EHR requirements. This is the dramatic effect of meaningful use on EHR development.

PwC actually focuses on how meaningful use will encourage patient participation in their healthcare or “shared medical decision-making.” To be honest, I’m not sure meaningful use has done much to help this goal, yet(?). Possibly meaningful use stage 2 and meaningful use stage 3 will help to further these goals. MU stage 1 has done little to encourage this. Regardless of the impact of meaningful use, shared medical decision-making is going forward fast and furious.

HIPAA 5010 and ICD-10 – The interesting issue for 5010 and ICD-10 is that they’ve basically been overwhelmed by meaningful use and EHR incentive money. Either of these changes alone would have been a reasonable challenge for a normal year. However, clinical organizations are battling through 5010, ICD-10 and meaningful use all at the same time. Are there any other IT projects going on that don’t involved these three things? I’d say probably very few.

Electronic medical device reporting (eMDR) – I found this point quite interesting. There’s been a lot of movement in 2011 in regards to what constitutes a medical device and who should take care of tracking and collecting the adverse events that occur on these devices. I don’t think we’ve come to a final conclusion on what will be considered a medical device and how we’re going to deal with reporting adverse events, but finally getting electronic reporting of adverse events is a good step in the right direction.

Be sure to read the rest of my Health IT Top 10 as they’re posted.

One of my all time favorite posts I’ve done was called “Develop Your Own EMR….Are you Crazy?” Hard to believe that was back in May of 2006. I should go back and check out the content of that post, but the title still rings very true to me. Of course, every entrepreneur that I know is a little bit crazy, so it should come as no surprised that I’m hearing all the time about new EMR software getting ready to hit the market.

Today’s encounter has to be one of the most unique. I was going to church in another state (visiting family for the Holidays) and I ran into one of my high school friends at church. We caught up and I learned that he’s the owner of a software development company. Then, as he learned what I was doing he just mentioned off hand that they were developing an EMR.

After I picked myself up off the floor, the meeting at church started so I didn’t really get a chance to talk to him. Since he’s my friend on Facebook (you know, a real friend that I know in real life type of Facebook friend), I sent him a message and hopefully we can connect. I’m really intrigued that his software development house is doing an EMR for someone. Obviously, now I have a ton of questions for him about the project. He did say before the meeting started that “it’s a BIG project.”

Of course, the message here is that there are a lot of people out there that are crazy (no offense intended) enough to start building another EMR. The problem is that there are so many doctors that are dissatisfied with the EMR software that’s out there, I’m sure until that’s resolved we’ll see more and more EMR software entrants. Oh, if only these brave souls knew what they were getting themselves into. I guess maybe that’s the beauty and key to entrepreneurship and why I love it so much.

Time to go through some interesting Tweets from the world of EMR and EHR.

@glevin1 – gary levin
Commodization of EMR | HealthWorks Collective

There was a link on this tweet too, but it looked like a link to a page that stole the content from the original article. I’ve been intrigued by the question of whether EMR is a commodity software or not for a while now. I still haven’t come to a firm conclusion. This article uses the idea that you can buy Allscripts MyWay at Costco as a way to say that EMR is a commodity. You can also buy eCW at Sam’s Club I believe. Although, as best I can tell, that was basically a PR move on the various EHR vendors part.

Also, the article says that Allscripts MyWay product came from the purchase of Misys. Actually, I think MyWay was originally Aprima. I believe the Misys EHR software is set to be sunset.

What do you think? Is EMR a commodity?

@BrianSMcGowan – Brian S. McGowan PhD
Percent of US PCPs using EMR = 17% in ’00′ – 28% in ’06′ – 46% in ’09′ (vs 99% in Netherlands) #socialQI #progress??

The link on this one was to a terribly long PDF file. So, I cut it out. I just wish I knew where Brian got his numbers. I call BS on the US having 46% EHR adoption in 2009. I still put us at about 25% EHR adoption now. Maybe a little higher if I’m being generous. Of course, a lot of people define EHR a lot of different ways. So, that might be part of the issue.

@DRZORBA – Zorba Paster
Back to the clinic. Everyone brings their records with them. No EMR here. If they lose their record then they’re @*%&M.

Hmm…imagine a world where the doctor didn’t keep any record. The patient was just responsible for the record. That idea is fraught with trouble and issues, but I bet many doctors would love to not have to worry about the records part of their job.

@medreccom – Medical Records
“Paper is dangerous and inefficient, it doesn’t belong in health care any longer.” Future of #EMR: on.mash.to/uhVkHn

I was interested in this tweet since it linked to an article on Mashable (a mainstream tech site). So, if I get this right, this article and series was sponsored (ie. paid for) by Lenovo and profiles Practice Fusion. In other words, Lenovo paid to advertise Practice Fusion on Mashable. Good for Practice Fusion. Although, I’m not sure how many doctors read Mashable. Maybe the article wasn’t about finding doctors, but was a way to find more tech people to come work at Practice Fusion. The article itself is pretty basic for someone that reads this site. Not a bad play if that was the intent. Full Disclosure: Practice Fusion advertises on this site. Although, they certainly didn’t pay me to write about this and link to it.

I’m not sure all the details of why this is the case (but I’m sure some will tell me why in the comments), but doctors are some of the most independent thinkers that I know. I’m not saying whether this is a good or a bad thing. It’s just an observation based on thousands of interactions with doctors from all specialties. This independence is shown in a plethora of areas from charting to treating to diagnosing to the business of medicine.

Turns out, this independence is part of why I’ve heard doctors say hundreds of times that they basically want their own EHR and not a mainstream one. Doctors want an EHR that fits their unique practice style. Thus they have an expectation that whatever EHR they choose should understand that each doctor is different and naturally adapt to each unique doctors need. Ok, that’s a pretty broad generalization and no one would ever vocalize it that way, but it’s an undercurrent that I’ve seen time and time again.

I believe this is an important characteristic of the EHR market that must be considered. If you don’t accept the broad theory of doctor independence in practice style and approach, then most of you will appreciate that doctors from various specialties have unique needs. The easy to understand examples are Pediatricians and OB/GYNs. Everyone can quite readily see that tracking child growth and pregnancy require different charting and documentation requirements. I believe each specialty could describe similar requirements that are unique to that specialty.

This doctor and specialty independence is why I’ve long argued against what everyone loves to call mass EHR vendor consolidation. Certainly we can all agree that we have too many EHR vendors right now. However, I’ve read many many people argue that there’s only going to be 3-5 EHR vendors left standing after the mass EHR consolidation (or EHR vendor failure). I just don’t believe that’s the case. If we get down to 100 EHR companies, I’ll be impressed.

There are two things that might partially affect my EHR consolidation prediction.

First, I won’t be surprised if some really smart company comes along and scoops up each of the best of breed EHR companies for various specialties. However, instead of sunsetting the acquired EHR software, they continue to offer that same EHR software to a specific specialty. Then, they do this over and over again across all the specialties. So, the larger company would own a pediactric EHR, an OB/GYN EHR, a Family Practice EHR, a Cardiology EHR, a Orthopedic EHR, an Oncology EHR, etc. You get the idea. Instead of getting benefits from software development consolidation, they get the benefits in other areas of their business. It would be really fun to run a company like this.

The other healthcare trends that could have a serious impact on this is the ACO movement and hospitals buying up clinics. I’m still not sure how those two trends are going to play out. However, this type of consolidation of healthcare entities could impact whether a specialty specific EHR is a viable option. Clinics that are bought by a hospital or become part of an ACO lose some of their independence. At least their independence in selecting an EHR software.

Are there things I’m missing? Any other trends that are happening that will change the EHR consolidation landscape?

It’s going to take a couple weeks to really process all that I saw and heard at HIMSS 2011. In fact, there’s no doubt that much of the content I publish over the next month or two will be things I learned from the people I learned from at HIMSS or influenced by what I saw and heard. However, after a good night’s sleep in my own bed I’m really happy with my experience at HIMSS. The energy and passion for healthcare IT that was found at HIMSS was really powerful and wonderful to be apart of.

I think those people out there that are asking if we’re in a healthcare IT bubble right now are on the mark. There’s very little doubt in my mind that we’re in a healthcare IT bubble. It’s a feature of $36+ billion in EHR incentive money being given out by the government. I can’t remember the size of the EMR market numbers off the top of my head, but $36 billion in money coming into what is a relatively small market is going to change things dramatically. So, it makes sense that this type of infusion of money would create a bubble of sorts.

One person in their comments that we’re in a healthcare IT bubble asked if the bubble would pop before HIMSS 12 in Las Vegas. I believe we have at least one or two more years before the healthcare IT bubble pops. In fact, if you thought that HIMSS 11 in Orlando was big, I predict that HIMSS 2012 in Las Vegas will be even bigger. The EHR incentive money will have started flowing and the trench battles will be in full swing as the 300+ EMR vendors battle each other for customers.

EMR software was obviously my focus at the conference and despite my comments about the lack of innovation by EMR vendors and the future of EMR, I think there are a ton of really interesting EMR approaches that in aggregate are going to impact the EMR world in really dramatic ways. Here’s some examples:

• Azzly described a meeting of EHR vendors they attended with ONC. The question was asked which EHR vendors in the room started development after the HITECH act was announced. Azzly was the only one to raise their hand. I’m sure there’s other EHR vendors in that same boat, but it will be interesting to see an Azzly EHR that was built post incentive go up against the legacy EHR software.
• ClearPractice was the first native iPad EMR (called Nimble) that I’d seen and there’s no doubt they’ve made a big play in that space. Will that combined with the backing of John Doerr and their internet driven sales change EMR as we know it?
• Will larger companies like Greenway and Sage continue to gain market share as they go after the EMR market while maintaining their customer experience? Or will they head the way of the Misys of the world and be bought up by other EMR vendors?
• What about NaviNet‘s entrance into the EMR world? Can they leverage their existing connections with so many providers to be a major player in not just interoperability but in EMR as well?
• Even the big behemoth of a company, GE surprised me when I visited with them. There was a polish and a professionalism that I loved about my visit with GE and GE’s Centricity Advance people. I think there’s a fair comparison with Microsoft. Something about the nature of the US loves the underdog and hates the big name player. Yet, the big company just keeps executing their vision and many doctors are going to happily buy and use their products.
• What about Ingenix‘s multiple EMR offering strategy? Will it just be confusing to clinicians or will they effectively differentiate their various offerings while providing a backbone for interoperability as well? Is the future large EMR vendor one that aggregates a bunch of niche specific EMR companies?
• What impact will the transcription based EMR vendors have on the market? I wrote about the change from transcription company to EMR vendor earlier this week. Watch for the names MD-IT, FutureNet, Intivia, and MxSecure.
• Many people probably don’t recognize the name MedPlus. However, everyone knows the company behind the MedPlus Care360 EMR: Quest Diagnostics. There’s something powerful about being able to turn on an EMR in a medical practice with basically the flip of an electronic switch. That’s what MedPlus can do since Care360 is already being used in so many clinics that use Quest for their lab work. Add in their existing lab sales staff that already have relationships with large numbers of clinics and they’re going to be a very interesting player in the EMR space.
• Free EMR is a really compelling marketing tool. There’s a reason that Practice Fusion and Mitochon Systems free EMR offerings get so much press and so many doctors evaluating their EMR offerings. While many might disagree with their model or even believe that it will fail, these companies have and will have an interesting impact on the EMR landscape.
• MicroMD offers an interesting approach. First, because of their existing LONG term practice management clients. Second, because of the interesting integration with the supply side of their company. Not to mention, the executives that I met with were some of the most realistic people and well thought out people I met at HIMSS.
• Props to EMR company MIE that could use a fake EMR company (Extormity) to launch themselves into the EMR discussion while also helping to open up the discussion as well.  If I were a doctor, I’d want to demo their EMR just so I could see if I could find any Extormity features in their EMR.  Although, maybe that’s just the blogger in me.

I could keep going on, but that gives you a bit of flavor of some interesting EMR vendors and their market approaches. Plus, this is just 16 of the 300+ EMR companies that are working in this space. Each one with their own interesting story.

The most exciting thing for an EMR nerd like myself is that we’re really only at the beginning. Wait until we get beyond 15-25% adoption and reach 50% adoption. Then, the fun really begins.

Full Disclosure: Practice Fusion, MD-IT, MxSecure, and Mitochon Systems are all advertisers on this site. EMRandHIPAA.com’s HIMSS11 coverage was also sponsored by Practice Fusion, provider of the free, web-based Electronic Medical Records (EMR) system used by over 70,000 healthcare providers in the US.

I’ve regularly talked about my belief that there isn’t just one major EMR market. Instead, I firmly believe that there are a number of EMR markets that are divided by clinic size, medical specialty, and possibly even location. In fact, there’s likely even other factors. There are just far too many EHR companies for this to not be the case.

I think this was also well illustrated in this blog post on Kevin MD about the “Perfect EMR Traits.” Here’s the perfect EMR trait #1:

Perfect EMR Trait #1: The ideal medical record would be tailored to the specific needs of a clinician, only exposing them to portions of the record which are relevant to their work.

Knowledge within healthcare is rapidly changing. Possibly more so than another other industry. Techniques which were considered state-of-the-art, can change in a matter of weeks. The electronic medical record has the potential to be the tool which disseminates those changes down to the clinician, through point-of-care decision support. EMR software should facilitate the clinician decision making, rather than requiring clinicians to keep track of the latest and greatest. This individualistic attitude creates discrepancies in care, which inherently leads to imprecise care.

While it is certainly technically feasible for an EMR vendor to be able to create software that satisfies Perfect EMR Trait #1, it’s just not practically feasible for an EMR vendor to satisfy every clinic size, medical specialty, and in many cases locale. This means that we’re going to see a wide variety of EMR software that satisfies the various EMR market needs.

With this as a preface, consolidation of EMR companies is going to become a very very real thing. However, I’d caution EMR companies that choose to just directly sunset an EMR software acquisition. In some cases, this is a reasonable solution based upon the EMR company’s existing EMR software. Plus, in many cases EMR vendors will be acquiring the EMR market share for their existing EMR software. I’m sure we’ll see more of this.

My recommendation for EMR vendors acquiring EMR software, is to be more selective in the types of EMR software that you acquire. It’s definitely worth considering the idea of sustaining the EMR software development of multiple EMR products. Is it really that hard to see a large EMR company that has an ED EMR software, a General Medicine EMR software, an OB/GYN EMR software, a Pediatric EMR software, etc etc etc.

An EMR vendor making a decision to act in this manner will require them to change how they look at EMR acquisitions. The EMR acquisition targets will dramatically change. Instead of looking for failing EMR companies where they can cheaply buy more EMR market share, EMR companies with this approach should be focusing on a quality EMR software that hasn’t yet achieved the EMR market share that they deserve.

The cool part about the strategy of maintaining multiple EMR software instead of the strategy of sunsetting one or the other is that you purchase a bunch of happy EMR users instead of alienating a whole mass of EMR users that’s software is no longer supported. Of course, this will require proper communication of your goals and objectives so that current EMR users see the benefit of the acquisition and aren’t left wondering what the acquisition means to them. I’m not just talking about standard PR spin. I mean real tangible communication and interaction which demonstrates your plans for the acquired EMR going forward.

An EMR company with this method of EMR software acquisition, also needs a different set of skills. After sunsetting an acquired EMR, you need to have a strong set of integration and transition services to make the change to your EMR as smooth as possible. You also require a unique sales force that can sell the transition to your EMR over a transition to an altogether new EMR software. None of these services are needed if you continue to maintain the acquired EMR. Instead, your company must focus on other redundant services like marketing that could be leveraged across companies.

Of course, this isn’t an easy task to do well. Acquisitions rarely are an easy process. However, I think this is a lesson that was recently learned by Google as well. There’s value after an acquisition to keep autonomous business units. In fact, doing so opens up a whole new set of acquisition targets in a less competitive environment.

If I were a board member at an EMR company, this is the type of stuff I’d be considering. Certainly not every EMR vendor is 1. in a position to do these things and 2. has the culture to make it happen. However, I predict that the EMR company of the future will be a conglomerate of multiple specialty specific EMR software and not just a one size fits all atrocity.

John Moore at Chilmark Research said, “So Many EHRs, So Little Time: Simply amazing that this market can support so many EMR/EHR companies. How they all survive or will survive is a mystery to me and rationalization will occur. ”

It really is pretty stunning that 300+ EMR vendors are still trying to carve their niche in the EMR market. That’s a lot of friendly (or not so much) competition.

However, I can’t help but sit back and wonder if we’re looking at this the wrong way. Maybe there’s not actually 1 EMR market out there. Maybe there are actually 50 EMR markets.

The case for 50 EMR markets is simple. There is an EMR market for every specialty. Add in regional differences, countries, and I think you could get close to 50 markets. However, the number of markets doesn’t really matter. What matters is that there’s more than 1 EMR market.

Almost every EMR vendor I’ve seen has had the challenge of deciding how they want to market their EMR software. It’s not an easy choice, but more and more we’re seeing EMR vendors focus on specific markets. I think that they’ve found that they can’t be all things to all doctors. Doctors in different specialties are unique and that by focusing on a certain specialty they can provide a real value added service to the doctors in that specialty.

Assuming there’s 50 EMR markets, that means that there’s only 6 EMR vendors per market. That’s a much more reasonable number to consider.

Now there’s no doubt that EMR vendors are working in more than one EMR market. Some of the larger EMR vendors are doing a great job focusing on a number of specialties. So, maybe it’s 10-20 real players in each specialty market. Still too many, but we’ll definitely see a lot of consolidation in this regard.

In fact, I’m a little surprised that we haven’t seen more EMR vendors purchasing up these specialty specific EMR vendors and having them work as kind of subsidiaries of the other company. Then, the large company can provide a variety of very targeted EHR products. The key for that company would be to build amazing interfaces between the various EHR products you own. Show true EHR interoperability between these products and you can sell them as a great package to even the larger hospital owned ambulatory practices. Could be a really interesting play for an EMR vendor I think.

Now, I’m sure that someone will say in the comments that one EMR vendor can serve all 50 markets. They can just build “modules” (or some other similar term) that customizes the EMR to meet the needs of that specialty. The problem is that the “modules” are always limited and lacking. Focusing a “module” of an EMR on a specialty and focusing an EMR on a specialty ends up with very different results.