Today at a healthcare IT meetup I attended in Dallas I ran into a former contact at an EHR vendor. He no longer works at that EHR company and has moved on to two other companies. In our discussion we had an interesting discussion about the market. Having moved on, he’d lost touch with the EHR market. He asked me, “Are there still 700 EHR vendors?” I told him there were probably 300, but I’ve contended that their have been 300 EHR vendors for a while. I’m not counting the hundreds of ancillary companies that are “certified EHR” but only perform 1-2 EHR related functions.
Over and over again I hear people talking about consolidation of EHR vendors. They say it’s going to happen and we’re going to get down to a really small number of EHR vendors. Some go as far as saying that there will be 2-3 EHR vendors after EHR consolidation happens.
I think this idea is ridiculous. At HIMSS, I figured out why I don’t think it’s going to happen. Someone told me, “Ambulatory healthcare is fragmented. It’s second only to florists when it comes to market fragmentation.”
This to me illustrates exactly why there can and will be so many EHR vendors. The ambulatory market is completely fragmented with thousands of really small businesses (ie. solo doc) doing just fine. Think about it. There are very few businesses that could survive at the size of a solo doctor practice. In every other industry, the businesses the size of a solo doc practice get eating up as the big boy competitors kill them with their buying power. The same can’t be said in healthcare. A solo doctor practice is a very viable business. Thus we see the market fragmentation and the plethora of EHR companies.
The above analysis does make you wonder why the solo doctor practice is still a viable business and if something in the future will make that option unreasonable from a business perspective. Although, that’s a subject for a future blog post.
Of course, when you think about the hospital EMR market there’s a much different story. We’ve seen EHR consolidation. The hospital market is much less fragmented and becoming less so every day. However, I’ll still be surprised if we go below 100 ambulatory EHR vendors.