2009: The year the EMR bubble bursts.

There seem to be several parallels between the dot com boom and bust + the current EMR market:

No clear business plans on the part of many companies.

Amateurish offerings being passed off by poseurs as mature, legitimate products.

High company failure rates.

Little critical analysis of products by prospective customers.

Questionable "value" of products to prospective customers.

Suboptimal quality control.

A lot of money being thrown at/invested in companies that are obviously destined for failure.

The likeliest longterm survivors being evident early on in the boom.

Pricing models divorced from the world of common sense.

etc., etc.

 

A major shakeup appears to be brewing. EMR adoption rates are lagging and the infinite pie that so many EMR startups dreamed of getting a piece of is actually rather small and being held onto by the CCHIT big dogs like a pit bull clamps down on chicken bone. Nervous physicians are either clustering around the biggest players or else standing on the sidelines, waiting to see which EMR will win the latest format war and become the new VHS or Blu-ray. With few customers willing to take a chance on the smaller, lesser-known vendors, the Starvation Spiral previously seen in the dot bomb days begins anew. (If you've never seen the documentary "Startup dot com" it's definitely worth renting if you can find it.) Smaller companies have only so much cash to burn through, so if the (physician) fish aren't biting, the next step is to cut the line and sell the rod + reel: either try to merge with a bigger EMR company or unload assets (code) for pennies on the dollar to the few companies that are still buying IP.

A few brave EMR startups may try to hook a base of users with low pricing and then attempt to grow this user base into a loyal, company-sustaining group + then gradually start offering additional "premium" services for more money. Given the pain involved with switching EMRs and the power of inertia, building the biggest group of users possible, as quickly as possible (even if it means practically giving the software away) might actually be a sound strategy. The success of the one man show known as Amazing Charts is partly due to such a strategy and the effect Amazing Charts has had on the perception of relative value offered by other EMRs must give the competition nightmares. Other vendors still attempt to marginalize Amazing Chart, but the actual customers appear to be happy with this low priced product. And in the race for eyeballs, Amazing Charts' stealth business model appears to be working. A wise big dog competitor would have bought Amazing Charts years ago and quickly euthanized it just to stop the EMR "brand dilution".

Misys is evidently not long for this world. Several other big dogs are also standing in quicksand, financially-speaking. Startups are realizing how poor their odds are and are making the calculated business decision of throwing in the towel before they lose their shirts.

Now toss in the inevitable threat of more free/cheap EMRs and suddenly it may be time for EMR companies to start to panic. "This town isn't big enough for the 100 of us, Partner..." After living through the dot bomb, Worldcom, Enron, the mortgage disaster, the housing collapse, etc. how many lenders/venture capital companies are left willing to hand out millions to an EMR company just to fuel the burn rate? Not many, I would expect.

2009 is going to see the collapse of several major players and likely a big chunk of the lapdog EMR vendors as well. Ongoing consolidation around a few of the big dogs. Major reductions in base EMR acquisition costs with a concommittant push by vendors to make up for lost profits by offering more and more services. A few critical articles exposing the myth of EMR as panacea.

It's easy to see why so many EMR vendors are aggressively attempting to market their wares at this site. They realize that they might not be around in a year or two...

 

Dr. Osler

Misys is evidently not long for this world.

I dont remember there ever being any good Misys news in the last 5 years.

I agree with everything you said except one thing:

Several other big dogs ....

They aren't Big Dog EMR companies, they are Big Boy EMR Co.s 

You hit alot of major risks in the EMR market, but missed my favourite one: the EMR world is standardless.  Despite weak attempts at creating standards, there is no momentum for consensus that ensures robust data exchanging that protects patient data. 

The stratospheric pricing for EMRs was what prompted me to write my own ... well, my third EMR now, as I could not see how such pricing could be justified.  But it really is more than a glorified database.  Otherwise if people didn't want the extra functionality they would be content with using paperport and a word processor.

I have a simple business model ... I write the EMR for myself to use in my own practice, and add suggestions from my users as I see fit.  If people wish to use my EMR, they are encouraged to pay me a small shareware fee which encourages me to keep developing it and releasing updates.  It's the same for free software too.  If users don't financially support the authors, the free software eventually withers from view.

But for me the freedom of using a client server/SaaS EMR of my own design is truly enabling ... I couldn't imagine using a product from someone else!  And that's what mainly keeps me going.

I totally agree, but I do think you will not see what you expect as far as the players standing.  And while I love open source and free offerings, I myself run a flavor of Linux at home, I don't see EMRs that are open source having a huge adoption rate because of the fact that they are free.  

DrMurdoch:

You hit alot of major risks in the EMR market, but missed my favourite one: the EMR world is standardless.  Despite weak attempts at creating standards, there is no momentum for consensus that ensures robust data exchanging that protects patient data. 

We actually need a set of ISO 9000 standards for EMR/EHRs.  While it won't work for the billing per say it will work on the charting side.

pylorns:

I totally agree, but I do think you will not see what you expect as far as the players standing.  And while I love open source and free offerings, I myself run a flavor of Linux at home, I don't see EMRs that are open source having a huge adoption rate because of the fact that they are free.  

I have been advocating an open source strategy, and I think it would solve a lot of problems for vendors as well as physicians and hospitals.  We should develop the underlying database as an open source engine.  It could run MySQL or whatever.  It shoudl scale well, so that my office could run it for 6k patients on a simple office server with a xeon, while a large tertiary center could use a rack of servers, much as google, yahoo, etc. do.

The main purpose for a single underlying database is to make EMRs finally be able to communicate with each other.  So far, each individual provider has been a digital island unto themselves, busily digitizing patient information, but unable to share this information in any way other than to print out paper to be scanned into another's system.  However, the reason for digiting this information is to make it searchable and usable - otherwise we are generally wasting our time.  That's why large healthcare systems have moved to EMRs - they have a mix of hospitals and clinics and can realize the benefits of an EMR, despite the inordinate costs.  However, this is only realized by using ONE EMR vendor among multiple environments.

If we have the shared database, vendors can create multiple and various front ends for physicians to interact with this database.  ENTs, Cardiologists, and podiatrists all have very different bits of data they are creating, and hardly need the same interface.  Quite likely, some open source project could work on a free front end for the underlying database, but I imagine that many physicians would be willing to pay for a slicker front end to work with, although the overall costs for the EMR vendors would be far lower.  They would have more time to spend on creating a slick user interface to improve efficiency.

The commercial success of open source in the server world, cell phones, search engines, embedded products, databases, and many other facets speaks to the viability of such a project.  We only need to get it started.

(Sent from a Treo, so expect formatting "issues")

Thanks for the comment. Big dogs, big boys and fat cats!

I have thought about the lack of standards issue, but I feel it will soon be a nonissue when one of two things happen: either the government wakes up and realizes that health care data is too big an issue to trust to the hobby coders, amateur startups and few professional EMR outfits that comprise the EMR vendors on the market + comes up with a national standard that guarantees portability and interoperability of data; OR as consolidation of EMR companies picks up speed, the few remaining "big boys" left in the EMR cabal finally get serious and quickly come up with their own standard. Given the amount of pain the conversion would cause a company that uses a data structure that is noncompliant with a reasonable standard, I feel it's unrealistic to expect the EMR vendors to police themselves. After all, the past 20 years of self-regulation by EMR vendors have led to anarchy, with many practices ending up stuck in an EMR Marriage From Hell simply because they have no simple way to export patient data. If the government simply had said in 1990 that in order to be "certified" as an EMR a product needed to be able to export and import all data as, say .txt files, the issue would never have become the EMR's "Dirty Little Secret" that it is now. But the longer the government takes to dictate minimum standards for the EMR vendors to adhere to, the longer the chaos will continue.

Dr. Osler

Osler:

If the government simply had said in 1990 that in order to be "certified" as an EMR a product needed to be able to export and import all data as, say .txt files, the issue would never have become the EMR's "Dirty Little Secret" that it is now.

I am changing sides again.  TEXT FILES - I am sorry but what a naive view of the glorified database.  I have no doubt 99% of the EMRs could do an automated dump to text files - but what the hell use is that.

You oversimplify EMRs and the challenges of writing software.  You compare EMRs to cell phones and search engines suggesting you really don't know what you are talking about - not that I do but please, enough ranting and complaining while offering nothing in return.  Go join the VISTA community or one of the other open source communities and provide your expertese if you know so much (which I doubt)

http://en.wikipedia.org/wiki/List_of_open_source_healthcare_software

gchiu:

The stratospheric pricing for EMRs was what prompted me to write my own ... well, my third EMR now, as I could not see how such pricing could be justified.  But it really is more than a glorified database.  Otherwise if people didn't want the extra functionality they would be content with using paperport and a word processor.

I have a simple business model ... I write the EMR for myself to use in my own practice, and add suggestions from my users as I see fit.  If people wish to use my EMR, they are encouraged to pay me a small shareware fee which encourages me to keep developing it and releasing updates.  It's the same for free software too.  If users don't financially support the authors, the free software eventually withers from view.

But for me the freedom of using a client server/SaaS EMR of my own design is truly enabling ... I couldn't imagine using a product from someone else!  And that's what mainly keeps me going.

 

You should be commended for you ongoing efforts. More people like you are needed to help keep the commercial EMR vendors honest. I do feel it would be helpful if you would market your product more (unless you are worried about the support headaches that would be generated if Synapse became TOO successful). Why not submit your software to PC Magazine, PC World, C/net and a bunch of download sites? Manipulate Google to get the Synapse website ranked highly in searches for "EMR", "EHR", etc. Offer it up to the Family Practice group that has published those EMR surveys in recent years. Push Synapse to the next level by getting the word out.

Dr. Osler

Actually, we experienced what seemed to be slowing in the EMR marketplace last winter and expected even more slowing during the summer (docs don't make EMR decisions during the summer), but things picked up brkskly during the summer and remain that way.  In talking with some "trusted" EMR competitors, they experienced the same.

My first real business was in CAD (computer aided design) and what you forecast in the EMR market also took place there.  It's worth pointing out that consolidation is consolidation.  While small companies often wish to align themselves with larger companies for fear of getting left behind, larger companies also wish to grow, often by acquisition, and so they also keep a watchful eye for a gem.

While you make reference to comapnies going for pennies on the dollar, if a company is going into bankruptcy, true. But there will be/are players who have a good product, have a loyal (and expanding) base, and who can afford to pick a suitor.

The reasons for acquiring a companyu are mixed.  In the case of Amazing Charts, for example, I suspect that they would be picked for their Rolodex of customers, not for their technology.  An acquirer would want the opportunity to upsell their clients to a more robust system....or as you aluded, take the product off the market and force the upsell.

In other cases, the acquirer might be looking for technology, but not the Rolodex.

With our earlier comapny, we had venture capital out of San Francisco.  The firm had another company in its portfolio that was failing.  Part of the terms of a second round was that we had to pick up the failing company.  They had neither a Rolodex or technology. We cleaned out the building and everything went into the dumpster.

Some companies get picked up for their revenue stream.  In this market, it's more likely to be the ASP-type, but I can imagine an acquirer wondering if maintenance fees could represent a nice revenue stream.

Some comapnies get picked up for both technology and Rolodex.  In our first company (my twin and I), we were picked up for both (lower priced software, larger customer base; more than half the Fortune 500 bought our software), but in our second, we were picked up for our technology (high priced, unique software, smaller customer base).

My impression, having lived through the dot.com era is that if you want to take a bet, do it on good technology, not the Rolodex.

(Duplicate post from Treo)

Duplicate post from Treo.

lengland:

Osler:

If the government simply had said in 1990 that in order to be "certified" as an EMR a product needed to be able to export and import all data as, say .txt files, the issue would never have become the EMR's "Dirty Little Secret" that it is now.

I am changing sides again.  TEXT FILES - I am sorry but what a naive view of the glorified database.  I have no doubt 99% of the EMRs could do an automated dump to text files - but what the hell use is that.

You oversimplify EMRs and the challenges of writing software.  You compare EMRs to cell phones and search engines suggesting you really don't know what you are talking about - not that I do but please, enough ranting and complaining while offering nothing in return.  Go join the VISTA community or one of the other open source communities and provide your expertese if you know so much (which I doubt)

http://en.wikipedia.org/wiki/List_of_open_source_healthcare_software

 

Unfortunately, you appear to have completely missed my point. I would suggest you read the post again and decide if your response makes any sense. The point is that we need a standard - whatever format it may ultimately be. Once we have a standard, the data is secure. The actual logistics re: data dumping and importing is another issue. But please stay on the "other side" until you have spent a little more time thinking about the "big picture" in EMRs.

By the way, I have never compared "EMRs to cell phones and search engines". You seem to be having difficulties understanding what I am saying, but I would appreciate it if you would at least refrain from misquoting me.

Dr. Osler

:)

I just wanted to say that Osler might be out-ranting me, which obviously can't be tolerated.  I am being forced to up my ranting to overdrive.

Where's Al ?  Hey Osler, post a post with the words CCHIT and Al's filters will go off so he can read this thread !

pylorns:

DrMurdoch:

You hit alot of major risks in the EMR market, but missed my favourite one: the EMR world is standardless.  Despite weak attempts at creating standards, there is no momentum for consensus that ensures robust data exchanging that protects patient data. 

We actually need a set of ISO 9000 standards for EMR/EHRs.  While it won't work for the billing per say it will work on the charting side.

 

 

I believe there already are a number of proposed "standards" for EMRs. The problem is they haven't been adopted universally. Unfortunately, a standard that isn't adopted is rather... useless.

A poster here previously linked to a nice summary of various standards. I'll see if I can find it again.

I wouldn't discount the power of software price with physicians. We are notoriously (ahem) frugal and with ongiong cutbacks in payments it's hard for many of us to risk thousands of dollars on an EMR that might not even work out. Furthermore, I feel many of the EMRs on the market are a LOT more sophisticated than what the average physician needs. Remember: we've been doing just fine for a few hundred years with plain old paper. Do we REALLY need or want many of the features that the higher end EMRs come with?

In reality, the main justification for the expense of a high end EMR is how adept it is at facilitating upcoding. Period. Painless generation of Level 4 visit documentation is where the best Big Boy EMRs earn their keep. I recently had a long conversation with someone involved with an uber-expensive custom rollout by one of the top dog EMRs. (Sorry, I can't say which one.) The focus is purely on revenue capture and upcoding. The fact that the software happens to generate bloated, sprawling, almost unreadable notes is sadly irrelevant. Welcome to the real world, Neo.

Dr. Osler