Facing a tidal wave of declining revenue, coupled with increased government, payer, and consumer scrutiny, providers continue to grapple with the challenge of enhancing outcomes while reducing costs.
Thanks to these Meaningful Use incentives, provider adoption of EHR software has skyrocketed.
However, while billions of dollars have been committed to EHR implementations, the jury is still out in terms of assessing the level of business and clinical benefit associated with these disruptive software deployments. Whether measured in enhanced patient outcomes, reduction of operating expenses, or preparedness for new healthcare business models such as ACOs, most believe the results have been difficult to quantify thus far.
Following the initial ‘shock and awe’ created by billions in Meaningful Use incentives, the provider industry is coming to the realization that EHRs alone do not solve their most pressing cost, compliance, and outcomes challenges. While the industry capitalized on the availability of federal stimulus to begin the long march towards connected healthcare, vendors playing into the clinical data space need to position their products to solve for the shift in balance of power away from traditional payer-to-provider relationships towards patient-centered care models and provider care coordination activities across disparate populations and care settings. The chart below illustrates our views on the opportunities and risks along the EHR adoption curve.
Given the client footprints that EPIC, Cerner, and numerous other EHR vendors have amassed during the last decade, there is no doubt that these substantial companies will be a core component of the HIT landscape for the foreseeable future. That said, the scale of the problems facing the healthcare industry easily surpass the capabilities of a single cadre of software vendors – no matter how large and successful they have become.
While we expect EHR adoption to continue, for EHR vendors to advance the scope and value propositions of their products over time there are enormous pockets of opportunity remaining that will foster the growth and scaling of numerous companies in adjacent sectors.
The changes that are impacting healthcare are neither smooth nor linear, making it extremely difficult to predict which industry participants have the competitive edge at any given moment. Through the adoption of ACOs and other risk-shifting techniques, the industry is attempting to evolve away from its fee-for-service roots and toward a value-based paradigm where reimbursement (cost) is aligned with the appropriateness and effectiveness of care delivery (results).
That said, none of this will ever come to pass unless the industry figures out how to capture and organize both structured and unstructured clinical data, engage in automated analysis of narrated clinical content, and then embed the results into real process improvements that lower costs and improve outcomes. Process improvement and, ultimately, results are the key and thus far the industry has experienced very little of either.
While the large EHR vendors have received a meaningful boost from the Federal government, a period of intense competitive turbulence has been unleashed that will produce dozens upon dozens of winners and losers without any of them ever engaging in head-to-head combat with the core businesses of EPIC, Cerner, Allscripts, or NextGen. Cross-sector competition among innovative HIM, content, and business intelligence companies will be the norm for the foreseeable future, and over time these dynamics will likely erase traditional competitive boundaries and create new industry leaders.
Let us know what you think.