Mergers, Acquisitions Threaten Stability of EHR Vendors
How could this trend affect your ambulatory practice?
The healthcare IT market is one of the most—if not the most—dynamic industries in today’s business arena. Trends emerge overnight, often blindsiding those in ancillary markets dependent upon healthcare IT products and services. One such trend affecting ambulatory practices nationwide is the consumption of EHR vendors as a result of escalating health IT mergers and acquisitions. In 2017 alone, the industry saw 53 healthcare mergers, acquisitions and joint ventures.1
What’s behind the trend?
The competition among EHR vendors is fierce. More than 1,100 businesses are hungry for a piece of the $28 billion pie—and the bigger slice, the better. As a young industry, players are still jockeying for position, looking for opportunities to distinguish themselves in the market and solidify their standing. Those that are financially advantaged and functionally nimble will likely absorb weaker players, particularly as funds from CMS’ meaningful use incentive programs dwindle.
What are the potential impacts?
Ambulatory practices subjected to their EHR vendor’s acquisition may face multiple disruptions:
Support teams dismantled. Where will you turn?
Consolidation can make it more difficult to obtain the support you need for maintaining or upgrading your EHR. Team reorgs can leave clients in the wake while they reestablish themselves. Or, the acquiring vendor may choose to end support services altogether.
Pricing increases. Will you pay more?
The acquiring company may not honor the contract terms of your former vendor. For example, one practice reported their original EHR vendor promised “no additional fees.” But when the vendor was acquired, the new owner imposed monthly support fees and required automatic payments. The practice then found support was not available, and in a short time, the fee increased.
Product/service changes. Will your needs be met?
The acquiring vendor may choose to revamp your product, leaving holes in your workflows and systems. Your practice may have to supplement its IT investment with additional technology platforms and face costs for maintaining multiple systems, including labor costs for the ongoing management of outdated systems.
Reorganization and layoffs. Will your existing relationships/connections be lost?
When companies go through change, reorganization and layoffs are never far behind. Long-standing relationships with account reps, client care specialists or technical support personnel may end abruptly.
Shifts in focus and investment. Will your product/service be neglected or discontinued?
Again, when companies go through change, they reassess their direction and investments. An acquisition can throw a cloud of uncertainty over the future of the products and services you rely on.
How can you prepare?
The best way to protect your practice from the potential disruptions of EHR vendor acquisition is to get in front of it. Compare the costs—in efficiencies, patient satisfaction and revenue—of an acquisition to those of switching vendors in both the short and long term. Those ambulatory practices that think and plan ahead will be those positioned to best ride the waves of industry change and succeed in the new age of healthcare.
For better questions to pressure test your future partner, view this checklist.