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Allscripts is buying a smaller EHR vendor at a time when giants are growing by expanding their market and scooping up the competition.
Julia Adler-Milstein, PhD, an associate professor at the University of California, San Francisco
When the healthcare information technology (IT) firm Allscripts announced this month its $100 million cash deal to acquire the cloud-based electronic health records (EHR) vendor Practice Fusion, the Chicago-based company said part of its rationale was the desire to grow its reach among smaller providers.
“Practice Fusion's affordable EHR technology supports traditionally hard-to-reach independent physician practices, and its cloud-based infrastructure aligns with Allscripts forward vision for solution delivery,” said Rick Poulton, Allscripts’ president, in a press release announcing the agreement.
The deal highlights what has been a persistent challenge for many EHR vendors: penetrating the small-practice market.
But Julia Adler-Milstein, PhD, an associate professor at the University of California, San Francisco, said the gap isn’t the result of lack of interest among independent physicians.
“I would not characterize it as more resistance (to EHRs),” she told Healthcare Analytics News™. “I think the process of selecting and implementing an electronic health record is just much harder on a small practice.”
Adler-Milstein, who also directs UCSF’s Center for Clinical Informatics and Improvement Research, said if there is resistance among small providers, it’s mostly about the daunting scope of the purchase and integration process, rather than an aversion to the technology. Indeed, while the hospital EHR market is dominated by a few big names, the market for smaller and independent practices is far more open.
“One thing that’s very unique about the ambulatory EHR market as opposed to the hospital market is there’s just many, many more to choose from,” Adler-Milstein said.
For Allscripts, the deal boosts the company’s overall breadth, giving it a stronger position from which to compete against larger rivals.
Allscripts had 2016 revenues of $1.55 billion, and although it’s still significantly smaller than competitors like Epic and Cerner, the company has been growing its footprint in the hospital sector, most notably through its August 2017 acquisition of McKesson Corp.’s Enterprise Information Solutions business.
Allscripts believes the deal will be a win for Practice Fusion’s clients, as they say their acquisition will add value and additional services to its offerings. That could help the merged company stand out in the crowded field.
However, Allscripts won’t necessarily need to alter its services to help smaller practices. Adler-Milstein suggested the most important differences in EHR needs aren’t related to practice size.
“In general, the needs of a primary care practice will be pretty homogenous, and the needs of a small cardiology practice will be pretty homogenous,” she said. “They certainly do differ by clinical specialty, and you do see EHRs that are geared toward specific specialties.”
One other area of synergy is in the potential links between hospital EHRs and practice-based EHRs. Some healthcare systems have been proactive about helping small and independent doctors connect to their EHR systems because the hospitals want to strengthen links to primary care. They also want access to primary care patient data.
Sometimes that synergy between providers goes beyond health IT.
“I think we’re in this moment where we’re realizing that some of these IT-related factors are driving consolidation and we’re trying to wrestle with whether that is a good thing or a bad thing, or both,” Adler-Milstein said.
For instance, that consolidation can have a streamlining effect and make patient handoffs more efficient. But it can also lower competition and perhaps decrease the drive for improvement.
As for the consolidation within the EHR market represented by the Allscripts/Practice Fusion deal, Adler-Milstein said it’s probably not the last merger or acquisition in the space—not by a long shot.
“Certainly, there is going to be consolidation,” she said. “The question is, ‘How much consolidation?’”