On the vendor side, interviewees indicated that there are between 1,000-2,000 total practice management vendors on the market in the U.S. This estimate suggests substantial but unrefined demand and a maturing vendor landscape. Thought leaders also acknowledge that the market is consolidating and the total number of vendors will likely markedly decline over the next several years. The majority of these vendors are considered regional players, providing basic administrative software to a limited number of small or medium sized clinics in a defined geographic area. Many of these vendors are small companies that promise to custom design software and provide support services to meet the specific needs of their client clinics. Interviewees indicated that these vendors develop systems and services of inconsistent quality, with a common difficulty being the ability to create useful interfaces with other systems both existing and anticipated (e.g., an electronic health record system or community-wide eligibility tracking system for low income individuals), facilitate the use of data standards for reporting and exchange and build in the flexibility to accommodate compliance with regulatory provisions such as those imposed by HIPAA.
The AAFP survey showed approximately 256 different EMR or e-health record software vendors, the largest being Medicalogic with 148 clients out of the approximately 1,440 clinics who indicated having some type of software in this area. Thought leaders describe the vendor landscape for the this market as similar to that of practice management applications with the bulk of vendors being regional players and with a few of the larger HIT and health care companies packaging EMR tools or functionalities with a full suite of practice management and clinical decision support applications.
Thought leaders identified four general groups of IT vendors in terms of market orientation and product focus:
- Regional players. As described above, the bulk of organizations currently developing and marketing physician office practice management software are small to medium sized regional players with 10-20 clients. Interviewees indicated that they often caution physicians who are tempted by the customization and low cost offered by many of these companies because of their lack of stability (most will either go out of business or be purchased by larger vendors over time) and their tendency to oversell the virtues of their customizations relative to the need to install systems that are easily integrated and designed to accommodate relevant data standards and regulatory requirements. One advantage to these systems may be in the area of support services because they deal with a smaller number of clients and support is provided, in many cases, by individuals who were involved in design and initial software installation.
- Application service providers (ASP). There are a growing number of dot.net organizations selling rights and support services for practice management software that they make available for installation and operations via the Internet. These organizations also tend to be smaller and offer the advantage of, in many cases, being focused exclusively on designing, improving and supporting a single package of practice management (and increasingly electronic medical record) software.
- Enterprise vendors. Interviewees indicated that there is a growing group of health care and health information technology corporations that combine practice management and electronic medical records functions with comprehensive offerings for health care information applications across all types of providers and settings. Prominent among this group of vendors are Epic, Mckesson and Cerner. Larger IT companies such as IBM also fall into this category.
- Best of breed vendors. Interviewees identified a number of vendors considered best of breed. These vendors have developed and marketed products with high-end functionality and performance in one particular aspect of practice management or electronic health record application. Examples include: AthenaHealth a partner of Siemans; Amico, a three-way partnership between IBM, Microsoft and Pfizer; Nexgen, Microsyst, GE Medical and Vitalworks.
Some thought leaders felt that the ASP model is a particularly promising mechanism for developing electronic records capabilities in individual physician clinics because it offers a low cost option for accessing and implementing the software in a particular clinic and an easily accessed platform in the Internet for data exchange between network providers and other community and policy stakeholders. Other thought leaders expressed skepticism that these products can be successfully integrated with a clinic’s locally operated system(s) for practice management functions.
In addition to the general information on the scope of the overall vendor landscape for practice management and electronic health records our environmental scan activities revealed the following, more generic findings on the nature of product offerings in this market:
- Modular product formats. In general, in most cases vendors do not market a single system that claims full services practice management or electronic health records functionalities. Instead, practice management or electronic health records (or, more often EMR) is used by vendors to describe a package of their products (called “modules”) that perform specific functions.
- Product modality. Most of the companies researched offer access to their data using multiple modalities, e.g., clinical workstation, handheld computer and web site.
- Clinical data repositories. Every product must store its data somewhere, more than likely in a relational database management system. It is also likely that this data has some degree of structure that can be used for analysis or other types of intelligent processing (e.g., alerts). In this sense, every vendor has what could be called a “clinical data repository.” However, only one or two products contain a sophisticated, fully integrated data repository by general IT industry standards
The cost of implementing and maintaining practice management systems vary widely depending on the nature of the application and services acquired and the particular clinic setting and requirements. Thought leaders indicated that, on average, physicians spend approximately 15 percent of revenues on health information management tools and applications and related applications over a fixed period of time that includes a major purchase or upgrade with approximately about one fifth of that amount being spent ongoing user support and technical assistance services. One interviewee indicated that this substantial investment in information technology has not reaped commensurate benefits in terms of efficiency or improved patient care. He attributed this to the lack of integration among different information management systems within the same clinic and the lack of attention to health information technology purchases as core strategic investments that will determine the success of the clinic in achieving clinical, operational and financial goals.