Small practices could show big growth in EMR market

With $8 billion in sales predicted in 5 years, technology vendors are shifting their attention to a previously untapped market, an industry report says.

By Pamela Lewis Dolan, amednews staff. Posted Nov. 23, 2011

The U.S. market for electronic medical records is expected to exceed $8 billion by 2016, up from $4.6 billion today, with the fastest-growing segment occurring in the small practice market, according to an industry report by Millennium Research Group.

The Toronto-based medical technology research company’s report, “U.S. Markets for Electronic Medical Records 2012,” found that the ambulatory EMR market still is underrepresented, because small practices have been slow to adopt. But that is changing now that small practices have a greater number of affordable system choices.

Mickel Phung, an analyst for MRG, said small practices initially got less attention from vendors because sales to those practices were considered far less lucrative. Now that the large practice market has, for the most part, become saturated, small practices are considered an untapped market, he said.

Meaningful use incentives from Medicare and Medicaid are playing a role in the growth in that “the incentive payments serve to overcome the greatest barrier to adoption: cost,” Phung said. But while meaningful use might get practices interested in buying, they are making purchases because of the improved quality and efficiency they find in using EMRs, he said.

The introduction of Web-based EMRs also is contributing to the growth in the small practice market, because many of the practices are looking for low-cost solutions, according to the report. Web-based systems generally require far fewer upfront costs to implement than systems that require a hosted server. Web-based systems generally don’t require an information technology staff, either, which also is why they tend to be popular with small practices.

Overall, there has been a huge increase in the number of EMR vendors in recent years. Phung estimated that more than 300 companies offer some sort of EMR. Many small companies have entered the market with Web-based products, and well-established companies also have introduced new Web-based products to pitch to small practices.

The number of choices may cause a practice to feel overwhelmed. Phung said that when shopping for a system, physicians need to consider whether the system was designed for a practice of their size — or their specialty. If going with a Web-based solution, they should look at their Internet service providers to determine their reliability. Poor Internet service could cause significant disruptions to the practice, since the EMR system would be inaccessible with no Internet connection.

With such a saturated market, physicians should consider the sustainability of their vendor.

“Frankly, a market with 300-plus competing companies is unsustainable in the long run,” Phung said. “With many physicians and hospitals moving towards the larger, well-established vendors, many of these other companies will face either consolidation or simply exit the market.”

Phung said many industry sources believe “there may only be a few dozen companies left in five years.”

“This is already apparent in the market today, with a select group of major EMR vendors holding a large portion of the market share, and many other companies with a small pool of customers,” he said.

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