Changes In EHR Market Affect Hospital Buying

By Megan Williams, contributing writer

As the U.S. healthcare environment shifts to focus on initiatives beyond EHR (electronic health records), solutions providers will need to keep their eyes on changing investment habits of healthcare providers.

This study from Frost & Sullivan (via EHR Intelligence) presents the belief that hospitals will move to make more investments in IT that focus around administrative systems. These investments will align with needed establishment of new business models that correspond to a changing provider landscape.

According to Frost & Sullivan Connected Health principal analyst Nancy Fabozzi,

“Most impactful will be cuts in Medicare reimbursement required by the Affordable Care Act as well as the shift to value-based reimbursement by commercial payers. Additional concerns are the growing competitive pressures from retail pharmacy clinics and third-party telehealth providers as well as the rise of the health insurance marketplace that requires individuals to select their own health plans and provider networks.”

Primary Drivers

Expect to see your clients reprioritizing their HIS (health information system) budgets to reflect a reimbursement focus on quality and efficiency over the next one to two years. Additionally, consolidation among providers and an increase in demand for services are expected to become more influential drivers of IT implementations than EHR needs have been, as value-based reimbursement models take precedence.

The study predicts that over the next five years, you can expect to see financial challenges fueled by a move away from fee-for-service reimbursement models, while consolidation and Meaningful Use uncertainties will likely only extend beyond a year or two.

Key Findings

Other key findings include:

• The U.S. HIS market is expected to grow at a compound annual growth rate (CAGR) of 5.7 percent between 2014 and 2020. It’s currently valued at $11.1 billion
• The fastest growing segment is expected to be administrative information systems.
• Financial information systems came in second with a CAGR of 9.7 percent between 2014 and 2020.
• Clinical information systems are expected to see more modest growth with a CAGR of 0.6 percent.

Doug Brown, managing partner of Black Book Market Research commented on similar findings by his organization,

“With so many organizations facing operating margins below the minimal thresholds for long-term financial stability and sustainability, boards and CEOs are moving financial support solutions and outsourcing initiatives to the top of their 2015 capital expenditure priorities.”