Today, GE announced the release of Centricity Advance, their solution for the ambulatory market. Centricity Advance is basically a build-out/rebranding of MedPlexus an SaaS EHR solution vendor that GE acquired in March 2010. GE now joins others (see below) in the EHR market who are striving to provide a complete acute to ambulatory EHR portfolio.
AllScripts’ acquisition last week of Eclipsys.
NextGen, a traditional ambulatory EHR vendor whose parent, Quality Systems Inc. acquired Sphere Health Systems and Opus Healthcare Solutions to target rural acute care facilities.
While some may argue that the HITECH Act and meaningful use requirements are core drivers for these acquisitions (e.g. tap future incentives payments in new markets), the real reason is the need for large healthcare organizations to more closely align smaller affiliated practices to their operations in anticipation of healthcare/payment reform (bundled payments, patient-centered medical home, etc.). These large institutions are increasingly seeking out such fully integrated acute to ambulatory solutions and is one of the core reasons that EPIC (they started in ambulatory and grew organically into acute) has seen success in the market. It remains to be seen if those pursuing an acquisition strategy will be as successful as EPIC for it often takes years for two systems to be combined in a truly integrated fashion.
Looking to the future, one has to wonder what will be the fate of those who remain in either just the acute or ambulatory sector. Our quick assessment of a few of the ambulatory vendors…
athenahealth: athenaclinicals is new to the market and the company has an opportunity to tap its existing customer base. Short-term, they’ll stay independent but likely to be acquired in 3-5 years.
eClinicalWorks: Fiercely independent and will likely attempt to pursue a strategy similar to EPIC’s and grow organically and stay independent. Will make some niche app acquisitions where needed to accelerate time to market.
Greenway: Will be acquired in next 1-2 years.
Sage: Like Greenway, acquired in near future.
Practicefusion: Will stay independent, may be rolled-up into a larger offering from a bigger entity that comes from outside healthcare sector, e.g., minority investor Salesforce.com
Now this is only our educated guess (and we certainly welcome yours in the comment section below), but in our conversations with numerous stakeholders in the market, this guess is one we’d be willing to bet on.
John, you missed out the VISTA platform from the VA and its 1M developer community, a platform with continuous innovation. Medsphere and WorldVista are leading the game in the open source community. We as a small group, has taken different direction, building customized patent-pending web-base processes for Physician House Call in large retirement facilities. Our IT team also leverage the open source and build more values around it for our community. There is another company in California having the Iphone access.
You see, this is another ecosystem with a huge community from both physicians and IT technologists. If you are “providing perspective on key IT trends in the healthcare sector”, I believe you have to know about them, especially with a huge movement toward home health.
This post is not so much about this technology platform versus that but more a reflection upon the macro economic forcing factors that will drive M&A activity over the next few years in the EHR market. While some believe that HITECH Act and the $$$ flowing forth into the sector will drive consolidation, Chilmark’s thesis is that the Healthcare Reform Bill and future payment reform will be the key drivers. Thus, whether or not someone is using VISTA or for that matter any other EHR makes little difference. It is the extension/connectivity between ambulatory and acute care facilities that is driving M&A activity.
Great analysis John. I am curious what your thoughts on the role of HIEs and their vendors will have on this?
I know you have an HIE report coming soon, but the speed of acq are pretty interesting for such massive companies that effectively have a 2-3 year window to grab as much market share as they can. All the while taking on massive integration projects, and massive rollouts for large clients.