Like the dot-com bubble, the EHR bubble—nurtured by the government incentives—will not last. As I look at what’s happening in the market, it becomes apparent that at some point in the not-too-distant future, the EHR bubble will pop and many vendors will face financial challenges that will lead to their demise.
Several market factors will come into play, including:
Physician dissatisfaction with their choice of EHR, which likely was selected in haste to meet the government’s incentive timetable and was delivered by an overwhelmed vendor;
Physician disenchantment with the EHR Incentives Program, as financial rewards decrease while requirements intensify;
To understand how these factors will affect EHR vendors, it is important to understand how such companies typically raise money and what kind of “hockey-stick” growth projections they made to attract investors.
Missed growth projections; continued expenses for implementation, support, and ongoing upgrades; and diminishing government incentives will leave many companies unable to find investors willing to fund their future growth.
There will be market consolidation, and financially strong companies will acquire distressed companies for pennies on the dollar.
Last week’s blog evoked some spirited comments, to which I will respond collectively. I encourage you to keep this conversation going by continuing to share your thoughts on this clearly hot topic.
First, let me clarify some terminology, so that we are all on the same page. Some responses to last week’s post confused browser-based applications with hosted ones. Any application can be hosted—the server can reside anywhere. However, software that runs by opening a browser (like Internet Explorer) and going to a website cannot possibly deliver the speed and crispness afforded by software installed on a PC.
There is no question that there are some advantages to browser-based applications, as was pointed out by readers. A few of these are indisputable, while others are debatable, but the overarching issue is the two models’ very different effects on physician productivity. Rather than debate the merits and drawbacks of the various alternatives, I refer anyone interested to “The Evolution of the Productivity-Focused EMR User Interface,” a white paper that explores those issues and suggests ways to overcome the respective drawbacks.
No matter how you balance the arguments in favor of one approach or the other, the fact remains: there is an undeniable difference in impact on physician productivity. This is something EMR vendors do not want to discuss and Wall Streeters do not take into account, but physicians need to consider it carefully. I’ve talked about productivity many times because of its critical importance to high-performance physicians, particularly high-volume specialists. (See the EMR Straight Talk posts on healthcare reform and government incentives.) A 30-second productivity differential per patient visit can allow a 3-physician practice to generate an incremental $700,000 in patient revenue over 5 years. For a 30-physician practice, the incremental difference climbs to $7 million.* This impact dwarfs the IT-related savings delivered by browser-based applications.
* These results use the Productivity Calculator to estimate the value of 30 seconds for each physician, assuming: 125 exams/week; 24 exam-room hours/week; 47 weeks worked/year; and revenues of $1.1 million/year.
Will not buy the type of EMR that is difficult to use and has not worked for other physicians in their specialty;
Will not risk the costs of a failed implementation;
Cannot tolerate the decrease in productivity—seeing fewer patients and generating less revenue;
Have established as a priority improving the quality of patient care they deliver, rather than collecting and reporting data that the government wants;
Cannot afford to take on unnecessary additional administrative burdens in the face of declining reimbursements;
Are not worried about potential penalties that will be relatively small, if they are even imposed at all; and
Are not interested in the government’s program, the benefits of which accrue primarily to other stakeholders, and not to their practice.
So why are these physicians, who have determined that government incentives are not relevant or achievable, still on the fence about adopting an EMR solution that will deliver measurable benefits? Staying with paper charts is not a good business strategy because there is nothing more inefficient!
The costs associated with the excess staff needed to manage these medical records are massive and wasteful—these positions can be eliminated or the employees can be more effectively used in revenue-generating or patient-care roles.
Paper charts hinder practice growth because adding physicians requires a proportional increase in support staff—medical records, billing, nurses, and medical assistants—and because physicians can’t see more patients without lengthening their work hours.
Slow responsiveness to primary care physicians limits referral volume.
Profitability is further affected by billing bottlenecks that delay revenue collection.
The chaos associated with trying to manage paper charts has a damaging effect on staff morale and creates rampant frustration among patients, physicians, and staff.
Paper charts are a malpractice nightmare—prescriptions are not consistently documented, orders are not easily tracked, and medical decisions are often made without complete clinical information.
You cannot afford to maintain the status quo.
Physicians can transform their practices without the government—there are excellent EMR solutions available, such as the hybrid EMR. It’s time to become digital. It’s time to get off the fence!