I was highly intrigued by Katherine Rourke’s article on EMR vendor consolidation. While I may not agree with the entire article, Katherine has raised some valid points. The health IT industry has seen enormous growth in the past few years and has to lead to an increase in highly sophisticated systems that are designed to run on multiple platforms and devices.
The problem for most EMR vendors is remaining competitive in the constantly evolving world of IT and the highly variable dynamics of the healthcare industry, do not aid their cause. While we have seen many products that have been withdrawn from the market, we have also witnessed a marked increase in new vendors. Consolidation and mergers usually occur in industries that have reached a stage of maturity, so this simply cannot be said about today’s highly volatile health IT industry.
Although we may witness small acquisitions every now and then, high profile mergers continue to be rare given the current market schematics. Interoperability is a major issue and most vendors require major work on their HIE networking. Many vendors should have accumulated sufficient finances from the growth in EMR adoption to fund the research and development work required to build these HIE interfaces.
It is not uncommon for IT based companies to generate external funding given market perception. Most IT companies have always been rated favorably in stock exchanges. However, companies starting afresh do not have a significant base to build upon. The competition in the EMR industry has helped improve the overall quality of solutions while it has brought the cost down. This has understandably impacted the amount of profits, which are not as significant as before.
The reason why we may not see competitors consolidate their business is user base and product identity. A merger is likely to alienate the user and could result in loss of business. The EMR market is highly segmented, where Products are sold regionally with local repute helping most vendors sell better. There is also the distinction of products that are designed for practices of a specific size and specialty. The products must complement each other for a successful merger, for example an EMR vendor merging with a Practice Management vendor. However, given the likelihood of health IT vendors developing elements missing in their solutions themselves, they are likely to refrain from mergers.