I’ve heard a lot of people talk about how it will be impossible for ambulatory EHR vendors like athenahealth and eCW to break into the acute care market. For those following along at home, both companies have announced that they’re building out their EHR software for the acute care market. These are big bets by both companies, but I think many people don’t realize the advantage these companies will have going into the very expensive hospital EHR market.
Companies like eCW and athenahealth will be able to come into a hospital with a native cloud platform that will let them offer some really aggressive pricing. When you’re paying $50+ million for an EHR (or $9+ billion for some), there’s a lot of wiggle room for a new entrant to enter the fray at a much lower cost point. That lower cost point will totally change the EHR value equation for hospitals. In fact, these cloud based hospital EHR will likely be able to compete effectively against a legacy EHRs upgrade costs alone.
Don’t believe this is possible? Take a look at the story about Delta Regional Hospital returning to MEDITECH. Why did they do it? Thomas Moore, vice president and CFO at Delta said, “We were looking for a system with a lower cost of ownership without sacrificing quality.” Moore later added this comment, “MEDITECH is a company that truly understands the meaning of value.”
During the wild west phase of EHR where the industry was propped up by $36 billion in stimulus money, everyone had the perfect rationale for spending hundreds of millions (and even billions) on EHR software. As we return to a more rational market we’re going to see hospital CIOs starting to place a much larger emphasis on EHR value. Showing that value is going to be hard for some of the larger EHR vendors who’ve charged hundreds of millions and even billions of dollars to their customers. Plus, it will be hard for them to lower their price.
In one online thread I participate on, a bunch of people were bashing Delta Regional Hospital’s decision to go back to MEDITECH. However, a former CIO offered this great insight:
Ya gotta spend time in a Meditech shop. It’s not flashy, but from a value perspective (and it does a lot more than just EHR), it’s hard to beat.
The same is going to be true with acute care EHR from eCW and athenahealth, but they’ll have some of the sexy factor as well. In the acute care EHR world I believe we’re just entering the new world of EHR value. Those who can tell the story of the value they’ve created for customers are going to win. Plus, we’re going to see a fierce battle from new entrants who are going to try and undercut the market. Think about how the EHR value equation changes when you can charge even $75 million instead of $100 million. That’s a game changer.
