The U.S. market earned revenues of $973.2 million in 2009 and total market revenues are expected to peak at $6.5 billion in 2012, primarily due to new licensing and upgrades as hospitals scramble to get certified EHR systems in place, according to a report from market researcher Frost & Sullivan.
“Revenues are expected to retrench some after 2013 due to increased market saturation and growing price competition,” the report, titled “U.S. Hospital EHR, 2009-2016: Charting the Course for Dramatic Change,” continued.
Since 2009, hospitals’ interest in EHRs has skyrocketed, primarily due to financial subsidies provided by the U.S. government’s HITECH Act, where the rate of hospital EHR adoption is expected to expand significantly over the next several years, particularly for advanced EHRs designed to meet meaningful use criteria, according to Frost & Sullivan.
The core hospital EHR market is considered to be mature and dominated by a handful of well-established, relatively entrenched vendors, the report found. “However, it is still a highly dynamic market in the sense that increasing provider consolidation, customer dissatisfaction with high prices and poor usability and uncertainties around the financial and logistical impact of healthcare reform do present new opportunities (and risks) for both existing vendors serving the market as well as new vendor entrants with niche products or services.”
“It is hard to precisely gauge how beneficial the actual stimulus funds will be for individual hospitals,” said Frost & Sullivan Industry Analyst Nancy Fabozzi. “Most hospitals may end up paying more than they earn. However, the prospect of Medicare penalties is very significant, especially in light of numerous other financial constraints facing hospitals today. The majority of hospitals have little choice but to do their best to adopt EHRs, and do so rather quickly.”
While the expanding use of EHRs is expected to continue to provide diverse and robust opportunities for many market participants, continued success is not a given—even for well-established vendors, the report stated. As health IT use grows, so too does customer sophistication and market competition.
“Continually connecting tools and services to customers’ needs is crucial, particularly during the near-term when many customer challenges will be most pronounced,” the report concluded. “While many hospitals have already picked their key clinical systems vendors, it does not necessarily mean they will stay with these vendors and it does not mean opportunities do not exist for other market participants. Vendor displacements will be a natural side effect of changes in provider ownership and management.”