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EHRVendorMarketBruce Eckert, Dennis PulsHealthcare Solutions

October 2018


Bruce Eckert Dennis Puls

Director, Healthcare Advisory

KPMG, LLPGrand Rapids, MI 49503

Cell [email protected]

• CPHIMS• HIMSS Fellow

• MBA, Michigan State University• BS, Mathematics, University of Chicago

Manager, Healthcare Advisory

KPMG LLPBoston, MA 02111

Cell: [email protected]

• CPHIMS

• MBA, Business, National University• BS, Industrial and Systems Engineering,

San Jose State University

mailto:[email protected]

mailto:[email protected]


KPMG Healthcare & Life Sciences

Our U.S. Practice

We link our consulting capabilities with deep expertise in audit, risk, regulatory, tax and M&A issues to help addressclients’ most complex problems

Audit AdvisoryTax

Large Market Footprint25,000 people firm wide (U.S.)1,900 partners and professionals90 offices in 50 states

High GrowthHCLS is a strategic growth priority and one of our highest growth industries.$6.9B

US revenues$2.4B US Advisory

revenues

Premier Client RelationshipsSpecifically, in the US we serve:• 18 of the top 20 health insurers• 50% of the top 200 HC systems and academic medical centers• 20 state governments for the

establishment of health benefit exchanges• 100% of the top 25 global life sciences companies

We are one of the largest providers of professional services to Healthcare & Life Sciences organizations globally.


EHR adoption approaches 100%

96%

Eligible Hospitals

No attestations

At least one attestation

Office of the National Coordinator for Health Information Technology. 'Office-based Physician Electronic Health Record Adoption,' Health IT Quick-Stat #50. dashboard.healthit.gov/quickstats/pages/physician-ehr-adoption-trends.php. December 2016.

0%10%20%30%40%50%60%70%80%90%

100%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Eligible providers

Any EHR Basic EHR Certified EHR

86.9%


Early adopters LaggardsInnovators Late majorityEarly majority

Visionaries

SkepticsTech Enthusiasts

Conservatives

Pragmatists

Geoffrey Moore’s Technology adoption life cycle


Product Maturity: Mature or declining?

The four life cycle stages and their marketing implications

EHRs

Introduction Growth Maturity Decline

— Falling sales

— Cost per customer low

— Profits fall

— Customer base contracts

— Number of competitors fall

— Peak sales

— Cost per customer lowest

— Profits high

— Mass market

— Stable number of competitors

— Low sales

— High cost per customer

— Financial losses

— Innovative customers

— Few (if any) competitors

— Increasing sales

— Cost per customer falls

— Profit rise

— Increasing No. of customers

— More competitors

Time

Sale

s

Shake-out

Saturation

Take-off

Based on “Characteristics of the product life cycle stages and their marketing implication” by Maximilian Classens, July 2017


Evidence


Sales: Peaking or falling?

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Annu

al C

hang

e

Milli

ons

of $

Total Industry Revenue Annual % Change


High or falling?Profits

7%

8%

9%

10%

11%

12%

13%

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

% o

f Tot

al R

even

ue

Milli

ons

of $

Profit ($) Profit (% of Revenue)


Customer costs: Up or down?

“New, more minimalist versions of the Epic EHR system will feature lower prices, though also less functionality. And these will be aimed at smaller hospitals, according to Epic.

“New Epic EHR systems currently in development will come with lower price tags and will target smaller healthcare…”

“New Epic EHR Systems to carry lower prices, aimed at smaller hospitals”

SearchHealthITShaun SutnerMarch 1, 2017


Customer base: Stable or declining?

1,600

1,800

2,000

2,200

2,400

2,600

2013 2014 2015 2018

US Health Systems

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

US Acute Care Hospitals“For the first

time ever, lessthan half of

physicians are independent…”

—Modern HealthcareMay 31, 2017

“6 Major Hospital Merger

Deals Making Headlines in 2018”

— RevCycleIntelligenceJanuary 4, 2018

“13 healthcare M&A deals that made headlines

in 2017”— FierceHealthcare

December 29, 2017

Hospital data from Statistica, Health system data from HIMSS Analytics


Competitors: Stable or declining?

0

500

1000

1500

2000

2500

3000

3500

4000

2011 Edition 2014 Edition 2015 Edition

Vendors Products

Data Source: Office of the National Coordinator CHPL site


What to expectLate maturity

The data suggests that the EHR market is in late maturity – approaching decline

Extrapolating behavior of other markets at similar junctures suggests potential future behaviors

— Continued consolidation – likely resulting in a stable duopoly

— Aggressive competition between surviving firms

— Lower prices – possibly leading to lower costs (for some)

Continual efforts to revert to “growth” or early maturity

— Incremental improvements touted as revolutionary

— Expansion of product and service breadth

— Expansion of product depth

Seeking of New Markets

— Broadening of client markets

— Shift from U.S. to Global markets


1: Duopoly


Eligible hospital meaningful use attestations by vendor

CMS Meaningful Use Public Data 1/19/2018

0

200

400

600

800

1000

1200

1400

Allscripts Cerner CPSI Epic MEDHOST MEDITECH All Others

2011 2012 2013 2014 2015 2016


Leading ambulatory EHR Vendors

CMS publishes data on all Meaningful Use attestations, including the Certified Electronic Health Record Technology (CEHRT) used for each attestation. We extracted data on the 485,841 Eligible Provider (EP) attestations from 2016 (the most recent data available), eliminated duplicates, and calculated the percentage of EP attestations by EHR vendor. In total, this data includes 515 EHR products for ambulatory settings. The top 15 EHR vendors, listed here, represent 73% of all EP attestations. The top four products represent more than 50% of attestations.”

Vendor name Vendor market share

Epic Systems Corporation 28.21%

Allscripts 9.21%

eClinicalWorks, LLC 6.57%

athenahealth, Inc. 6.03%

NextGen Healthcare 5.37%

GE Healthcare 5.00%

Cerner Corporation 4.32%

Greenway Health, LLC 2.91%

eMDs 1.12%

Modernizing Medicine, Inc. 1.09%

MEDENT – Community Computer Service, Inc.

1.03%

Integrated Practice Solutions, Inc.

1.03%

Practice Fusion 0.89%

McKesson 0.86%

SRS-Health 0.72%

50%

73%

Source: EHR Products Used for Meaningful Use Attestation 2016 dataset, CHPL 2014 and 2015 edition summary data

Epic Systems Corporation, 28.21%

Allscripts, 9.21%eClinicalWorks, LLC, 6.57%

Athenahealth, Inc., 6.023%

NextGen Healthcare, 5.37%

GE Healthcare, 5.00%

Cerner Corporation, 4.32%

Greenway Health, LLC, 2.91%

eMDs, 1.12%

Modernizing Medicine, Inc.,1.09%

https://dashboard.healthit.gov/datadashboard/documentation/ehr-products-mu-attestation-data-documentation.php

https://chpl.healthit.gov/#/resources/download


Hospital EHR Market share

Epic, 1669, 31%

Cerner, 1335, 25%

MEDITECH, 933, 17%

CPSI, 539, 10%

MedHost, 248, 4%

Allscripts, 169, 3%

Allscripts-McKesson, 208, 4%

Other, 334, 6%

HIMSS Analytics 1/8/2018

AllscriptsEpic

CernerMeditech


2. Attempts at renewal


Continuous efforts to return to “Growth” phase

Introduction

Growth

Maturity

Renewal (b)

Cus

tom

ers

Decline (a)

Time


May 21, 2018 HealthcareITNews

“Next-gen EHRs: Epic, Allscripts and others reveal future of electronic health records“EHRs will feature automation analytics, telemedicine, genomics and more in the not-too-distant future.”

“The industry needs an entirely new approach to the EHR. We’re seeing a huge need for the EHR to be mobile, cloud-based and comprehensive to streamline workflow and get smarter with every use.”

— Paul BlackAllscripts


“The EHR is so last year”

“ “The EHR is so last year,” Faulkner said. Now, the company is interested in a “comprehensive health record,” which includes information on diet,

sleep, weather, crime, education, food access and more. In the future, this information will exist in a patient's

record alongside the more traditional health data already there.”


3: Expanding product and service offerings


Typical Healthcare provider IT budget

Staffing

EHR Support Contracts

All Other Support

Contracts

DC and HW Maintenance

Other ServicesAll Other


Broadening product and service breadth

Staffing, Consulting,TrainingQuality Reporting,RegulatoryComplianceBenchmarkingCompliance

DI EQ, PACS, CPACSPharma Robots, CabinetsNurse Call, Blood BankPathology, MicroLIS

Pat portal, PHR, TelehealthHome Health, EDMMedical Knowledge, RCMERP, Analytics, PHM

Upgrade Mgmt,Interoperability, Performance MgmtSOC NOC DRPHardware Hosting

EHR


A vendor listing of products their system replacesLaboratory — Duplicate patient identification - Non-patient transport — Endocrinology/Diabetes — Apple HealthKit and Google Fit Integration — Interactive nursing worklist — Denial management — Patient statements— Anatomic Pathology — Electronic consents and e-Forms - Patient movement — Endoscopy — Automated notifications to fill cancelled and open

appointment slots— IV preparation system — Direct claims submission — Payment plans

- Autopsy — EMPI - Patient transport — ENT/Otolaryngology — Care team information — Breast milk administration — Electronic remittance posting — Payment Propensity- CAP synoptic reporting — Health information exchange - Temporary beds/rooms — Fertility — Check-in kiosk — Maternity/Labor and Delivery — Insurance follow-up management — Self-pay/Collection management- Cytology — Medical inbox - Transfer center — Gastroenterology — Dining menus and meal ordering — Medication administration record — Remittance reconciliation - Specialty charging/billing- Histology — Patient merge tools — Digital patient room name displays — General surgery — Discharge instructions — Narcotic reconciliation system - Patient service and engagement — Anesthesia- Surgical pathology — Paging system — Enterprise scheduling — Genetics — Facility/appointment maps — Pastoral care — Customer relationship management/Call

management— Dental

— Clinical Lab — Reference-quality image exchange - Complex procedure/Multi-visit scheduling — Geriatrics — Home/mobile patient portal — Patient acuity management — Financial assistance — Radiology- Chemistry — Release of information - Dialysis scheduling — Gynecology - Bill pay — Patient education — Financial counseling — Research- Handheld PPID specimen collection — Scanning (onsite/low volume) - Family and group scheduling — Hematology - eCheck-in — Pediatric conscious sedation — Patient cash collection and reconciliation — Reference Lab- Hematology — Secure messaging - Inpatient scheduling — Infection control - Earlier available appointment notifications — Point-of-care documentation — Patient estimates - General- Immunology — Workflow engine - Open scheduling — Medical oncology - Health maintenance and disease management

reminders— Rehabilitation — Patient receipts — Central Business Office

- Microbiology Content - Outpatient scheduling — Molecular diagnostics and genomics - Lab results, medications, and immunizations - Physical Therapy — Patient statements — CDM maintenance- Quality control — Algorithms and scoring - Rehabilitation scheduling — Nephrology - Patient-reported outcomes (PRO) - Occupational Therapy — Payment plans — Charge integrity- Urinalysis - Patient acuity (e.g., APACHE, MEWS, PEWS) - Referral scheduling — Neurology - Payment plans - Speech Therapy — Payment propensity* — eCheck Payment Posting

— Critical results management - Disease risk (e.g., ASCVD, CVD, MELD, PELD) - Scheduling for translation services Population Health - Prescription renewal — Respiratory therapy — Self-pay/Collections management — Management and Productivity Reporting— Management and productivity reporting - Readmission risk (e.g. LACE) - Surgical scheduling — Accountable care organization (ACO) support - Provider and care team messaging — Restraint documentation - Specialty charging/billing — RAC audit tracking— Molecular - Workload acuity — Enterprise patient registration — Activity tracker and app integration - Push notifications — Risk scoring — Emergency — Receivables management

- Cytogenetics — Assessment tools (e.g., FLACC/rFLACC pain assessment, LATCH Breastfeeding documentation, Braden scale for pressure score risk, Silverman-Anderson index, growth charts, etc.)

- Emergency department registration — Bulk orders - Questionnaires — Sedation documentation — Home health/Hospice — Revenue recovery

- Flow cytometry — Care plans - Hospital registration — Care coordinator/manager support - Scheduling and appointment reminders — TPN order management — Injection/infusion center — Workload prioritization tools- Molecular genetics — Clinical decision support - Lab registration — Care gap identification - Surveys — Trauma doc/Code narrators — Post-acute Post-Acute and Home Care- Whole exome sequencing — Clinical and Revenue Cycle improvement programs — Office/clinic registration — Care management - Self-service estimates — Unit whiteboard — Research — Home health

— Reference lab — Clinical calculations — Integration for address verification, eligibility, and authorization checking

— Clinically integrated network support — Home monitor/wearable integration — 340b accumulators — Reference lab — Home health coding

- Customer Relationship Management — Clinical quality measures — Management, productivity, and throughput reporting

— Community population health portal — Interactive Care Plan Provider Mobility — Therapy — Homecare drive time tracking

- EMR Connectivity: point-to-point and cloud-based

— Clinical pathways — Patient flow — Community resources directory and portal — Multi-EHR portal — Mobile apps for Apple Watch - General — Homecare nurse and aide scheduling

- Orders and result management — Dashboards — Patient armband formatting — Chronic care management support — Patient complaint system — Mobile apps for smart phones — Bundled payments — Hospice- Provider web portal — Forms — Referral management (provider finder and

authorization management)— Wellness program support — Patient questionnaires — Mobile apps for tablets — Central Business Office (CBO) — Medicare and general billing

Analytics — Flowsheets — Retail clinic — EHR-neutral population management and data exchange

— Portal for admitted patients — Mobile barcode medication administration — CDM maintenance — Mileage calculator

— Benchmarking (peer group, nationwide) — Import utilities — Real-time registration quality assurance/reporting

— Employer dashboards — Portable personal health record (flash drive) — BCMA) — Charge integrity — Nursing Home (MDS)

— Business intelligence — Note templates — Wait time visual displays (clinic and emergency department)

— Exception management — Proxy access — Mobile barcode specimen collection for nurses and phlebotomists

— Management and Productivity Reporting — OASIS registry and quality review

— Cancer tumor registries — Oncology protocols Ambulatory — Multi-organization population management — Self-service estimates — Mobile barcode blood product administration — RAC audit tracking — OASIS XML file extract— Cost & utilization analytics — Registry configurations — Ambulatory electronic medical record — MSSP and HCC dashboards and work flows — Video visits — Mobile Transport — Receivables management — Off line clinical documentation— Data marts and registries — Reports — Ambulatory pharmacy and inventory management — Patient outreach and engagement Inpatient — Mobile radiology imaging documentation — Revenue recovery — Post-acute rehabilitation— Department-level databases — Questionnaires — Automated charge capture and routing — Patient-centered medical home (PCMH)

support— Acute care reporting and Clinical Decision Support

(CDS)— Nurse rounding — Workload prioritization tools — Skilled nursing facilities

— Enterprise data warehouse — Order sets — Community-based medicine — Performance monitoring — Advance Care Planning — Push notifications — Ambulatory — Swing beds— Episodic variation analysis — Visit templates - Complementary medicine — Preventive health programs — Blood product administration — Portable laptop system for home care and hospice - Coding and reimbursement — Transitional Care Unit (MDS)— Genomic repository* — Workflow build - Employer-based clinic — Provider scorecards — Care plans — Secure chat — Coding audit tools Research— Operational dashboards Technical Components - Mobile clinic — Population health — Clinical Case Management — Web-enabled system for secure home or office PC access — Coding abstracting — Adverse event tracking*— Productivity reporting — Access logging - School nurse — Quality reporting — Clinical pathways Managed Care — Coding Edits — Direct-to-patient recruitment— Real-time self-service reporting and analytics — Audit trails - Shelter/Food bank — Referral monitoring and management — Clinical utilization management — Enrollment and benefits for providers — Coding audit tools — Encounter/Order association with research

studies— Report scheduling and distribution — Incoming and outgoing interfaces - Traditional medicine — Risk stratification — Critical Care (ICU, NICU) — Chronic Disease Case Management for providers — Compliance audit tools — Point-of-care recruitment— Quality and predictive analytics — Security management — Electronic Prescribing of Controlled Substances (EPCS) — Registries — Critical Care (Remote Monitoring) — Capitation receipt and reconciliation for providers — Contract management — Portal for research patients

- Chart deficiency tracking and follow-up — Standards-based interoperability — E-Prescribing — Social determinants of health — Discharge planning — Enrollment and benefits for payers — Contract variance — Patient research study tracking- Clinical documentation improvement — System hosting — Federally Qualified Health Centers (UDS Reporting) Telemedicine — Decision support — Utilization review and chronic disease case management

for payers— Physician level of service calculator — Patient reported outcomes

- Predictive analytics — User provisioning — Nurse triage (nurse call management) — Apple HealthKit and Google Fit Integration — Emergency department information system — Capitation receipt and reconciliation for payers - Claims and Remittance — Research consent tracking- Sepsis/early warning monitoring — Web service editor — Occupational medicine — Cross-organization telehealth - ED map views — AP claims/Capitation — Benefits management — Research billing

Perioperative Patient Access — Patient/Family education delivery — Distance care - ED Track Board — Marketplace support — Bundled payments — Specialty-specific databases— Anesthesia information system — ADT — Patient health summary - Distance consult (provider to provider or

provider/patient)- ED Triage — Medicare advantage — Claims editor — Study administration

— Capacity/Utilization reporting — Census tracking and reporting — Retail medicine — Home monitoring device integration - EMS (dependent on connectivity) — Premium billing — Claims status checking — Study feasibility determination— OR Grease Board — Patient flow — Specialty pharmacy — Remote ICU — Flowsheets Enterprise Billing — Denial management Radiology— Perioperative nursing care management - Bed management — Urgent care — Remote bed monitoring — Inpatient Electronic Medical Record — Hospital — Direct claims submission — Interventional radiology— Preference card management - Bed planning — 340b accumulators — Support for remote interpreters — Inpatient pharmacy - Coding and reimbursement — Electronic remittance posting — Peer review— Specialized registry submissions - Capacity management Specialty Care — Second opinion service - Inpatient pharmacy inventory management — APC grouping — Insurance follow-up management — Breast care information system— Surgery case scheduling/tracking - Capacity planning and forecasting — Addiction services — Specialty e-consults - Medication tracking (preparation and delivery) — Contract management — Remittance reconciliation Cardiology— Surgical coding - Command center — Allergy/Immunology — Store and forward - Medication alerts — Contract modeling - Patient service and engagement — Cardiovascular information system— Surgical documentation - Discharge efficiency — Anti-coagulation — Tele-nursing - Medication repackaging and labels — Contract variance — Customer relationship management/call

management— Cardiology registry submissions

— Automatic charge capture - Discharge planning — Antimicrobial stewardship — Tele-stroke - Pharmacy reporting and decision support — Simple visit coding — Financial assistance - ACC-NCDR— Charge routing - Environmental services — Behavioral health — Video visits (scheduled and on-demand) - Pharmacy interventions - Claims and remittance — Financial counseling - ACC-NCDR ICD— Chart and film tracking - Hospital logistics — Bone marrow transplants — Virtual rounds - Pharmacy clinical monitoring/Surveillance — Benefits management — Patient cash collection and reconciliation - CathPCI— Clinical decision support (CDS) - Mass casualty triage — General dentistry Patient Engagement - Pharmacy point of sale — Claims editor — Patient estimates - PINNACLE— Document imaging/scanning - Mobile transport — Dermatology — After Visit Summary — Infection control — Claims status checking — Patient receipts — Cardiology structured procedure

documentation


“Keep for now …”

Laboratory Ambulatory

— Blood bank — Patient education content

— Courier management Specialty Care

— Lab instrument middleware — Nuclear medicine

— Point-of-care testing server — Ophthalmology Image Management System

— Tissue bank — Radiation oncology – record & verify system

Perioperative Telemedicine

— Alarm solution — Video Platform Vendor

— Blood gases Patient Engagement

— Document imaging/scanning (high volume) — Discharge instructions content

— 3D reconstruction software — SMS Gateway

Technical Components Inpatient

— Active directory — Carousel medication inventory

— Biometric authentication — Clinical device integration middleware

— End user help desk management — Drug database

— Interface engine — Fetal monitoring

— Smart card readers — Food/Meal Management

— Single sign–on — Medical information reference tool

— Telephony and fax — Medical terminology (SNOMED)

Business Applications — Medication robotics/ADS

— Budgeting — Patient education content

— Donor Management and Fundraising — Physician-friendly Dx (IMO)

— Employee Contact Information — Robot assembly of IV syringes

— ERP — Smart pumps

— Facility Maintenance Management — ECG, EEG, EKG

— General Ledger

— Gift Shop Enterprise Billing

— Human Resources/Recruitment — Credit Card Gateway

— Kitchen Management — Encoder

— Laundry — Eligibility and Claims Clearinghouse

— Learning Management — Medicare Cost Reporting

— Marketing — OCE Edits

— Materials Management Research

— Non-pharmacy point of sale — Clinical Trial Management

— Payroll Radiology

— Staff Scheduling — PACS

— Time and Attendance Cardiology

Patient Access — CPACS

— Medical necessity content — Pacemaker Tracking

— RTLS/RFID — Hemodynamics & EP Reporting


“Related offerings”

Pharmacy— Automated

Dispensing Cabinets

— Retail Pharmacy— Drug Database

Laboratory— Cowpat

Anatomic Pathology

— Helix— Sequence— Blood Bank— HLA— Microbiology— Laboratory

Outreach

Imaging— CV Imaging

Management— ECG

Management— Care Aware

Multimedia— Camera Capture— Image Sharing— Skive PACS— Radner RIS— Radner

Mammography— Visual Desktop

Integration— Endoscopy

Imaging

Other— Skybox RFID— Patient Kiosk— HealtheLife

Clinical— CareAware

– Event Management

– iBus– Connect– DeviceLink– VitalsLink

— Patient Observer

— Remote Patient Monitoring

— FetaLink— CareTeam

Communications— Infusion

Management


4: Expanding the client base


Broadening of client base

Hospital


Client-base expansion

AcutePrimary

careBehavioral

healthLong-

term care

Homecare and

hospice Rehab

Clinical Documentation

Revenue Cycle

Interoperable

Longitudinal EHR

Longitudinalrevenue cycle

Managed CareManage your health

insurance operations

Enrollment and Eligibility Customer Relationship Management

Portals for Providers and Member Services

Utilization Management

Care Management Claims Adjudication and Premium Billing

Cerner Continuum of Care

Epic Managed Care


5: Lower pricing


Differentiated pricing strategy

Price

P

Q Quantity

Demand

Equilibrium

SupplyWilling to pay more than Equilibrium

Willing to buy if pricing is lower


eClinicalWorks Published pricing

Physician Practices

EHR OnlyEHR with Practice Management RCM as a service

$449/mo.Per Provider

$599/mo.Per Provider

2.9%of practice collections

No Startup Costs No Startup Costs No Startup Costs

HospitalsStarting at: $599/bed/mo.

Includes maintenance, support and hosting. No up-front license fees.


6: Going global


NO DATA NONE UNDER 25% 25% TO 50% 50% TO 75% 75% TO 99% 100% Row Totals

Countries

% World Pop Countries






% World Pop Pop (millions)

% World Pop

Cou

ntry

per

cap

ita in

com

e le

vel

Bottom Quarter

Afghanistan, Kenya, Mozambique, Nepal, North Korea, Sudan, Uganda, Yemen + 28 others

7% Congo, Rwanda, Niger, Tanzania

2% Bangladesh, Cambodia, Kiribati, Malawi, Tajikistan, Zambia

3% Ethiopia 1% Lesotho 0% 1,009 14%

Second lowest Quarter

Ecuador, Ghana, Honduras,Laos, Morocco, Nicaragua, Sri Lanka, Syria, Ukraine + 17 others

3% Angola, Bosnia, Jamacia, Myanmar, Timor-Liste, Tunisia Vietnam

3% Bolivia, El Salvador, Moldava, Nigeria, Uzbekistán

3% Dominican Republic, India, Indonesia, Mongolia, Pakistan, Paraguay, Philippines

26% Cabo Verde, Guatemala

0% Albania 0% 2,589 35%

Second Highest Quarter

Algeria, Gabon, Libya, Macedonia, Mauritius, Serbia, Venezuela, + 9 others

1% Iraq, Cuba 1% Egypt, Lebanon, Argentina, Malaysia

2% Azerbaijan, Belarus, Brazil,China, Iran, Jordan, Latvia, Mexico, Peru, South Africa, Turkmenistan

26% Colombia, Costa Rica, Chile, Panama, Poland, Thailand, Poland

3% Botswana, Bulgaria, Croatia, Montenegro, Hungary, Kazakhstan, Turkey

2% 2,556 35%

Highest Quarter

Andorra, Antigua,Bahamas, Brunei, Equatorial Guinea,Monaco, Seychelles

0% Trinidad & Tobago

0% Bahrain, Japan, Russia, Saudi Arabia, UAE

4% Australia 0% Greece, Kuwait, Lithuania, Malta, Spain

1% Belgium, Canada. CzechRepublic, France, Germany, Ireland, Italy, Portugal,Singapore, Slovakia, South Korea, Switzerland,USA + 7 others

9% Austria, Denmark, Estonia, Finland, Iceland, Israel, Netherlands, New Zealand, Norway, Sweden, U.K.

2% 1,214 16%

Totals 11% 6% 13% 54% 4% 11% 2% 7,368 100%

Global EHR adoption rates


EHR Vendors Around the WorldVendor Home Country Major MarketsAgfa HealthCare France WorldAllscripts/McKesson USA USA, EuropeCerner USA WorldChipsoft Netherlands NetherlandsCSC/iSoft USA/Australia UKDedalus Healthcare Systems Group Italy Italy, Middle EastDXC USA UKEpic USA WorldEveris Spain SpainHarris Canada Canada, USAHospital OS Thailand ThailandHOSxP Thailand ThailandIntersystems TrakCare USA Australia, Asia-PacificMedasys France EuropeMEDITECH USA USA, Canada, South AfricaMIMSYS Technologies India IndiaMV Soul Brazil South America, Central AmericaNapier Singapore SingaporeNeusoft China China, USANTT Japan WorldOrion New Zealand New ZealandPhilips Netherlands WorldWorldVISTA USA World


Today’s global reach

Vendor A Office Locations— Melbourne, Australia— Copenhagen, Denmark— Helsinki, Finland— Den Bosch, Netherlands— Al Khobar City, Saudi Arabia— Singapore— Dubai, United Arab Emirates— Bristol, England, United Kingdom— Verona, Wisconsin, USA

Vendor B Office Locations— North Sydney, Australia— Vienna, Austria— Gmund, Austria— Sao Paulo, Brazil— Cairo, Egypt— Paris, France— Idstein, Germany— Augsburg, Germany— Berlin, Germany— Erlangen, Germany— Essen, Germany— Hamburg, Germany— St. Wolfgang, Germany— Bangalore, India— Dublin, Ireland

— Kuala Lumpur, Malaysia— The Hague, Netherlands— Singapore— Oslo, Norway— Doha, Qatar— Riyadh, Saudi Arabia— Madrid, Spain— Stockholm, Sweden— Abu Dhabi, United

Arab Emirates— Dubai, United Arab Emirates— London, England,

United Kingdom— Kansas City, Missouri, USA


Alternative scenarios

Substitutes and new entrants


EHR substitutes

Self-development— VA— MHS — Nine* commercial self-

developed sites left

Best of breed— Data integrity— Integration challenges— Cross-industry trends— Application

rationalization

Manual— Medical coding— Medical billing— Instrument data

collection— Quality reporting


New entrants: Industry attractiveness(?)

Cerner SP500 AllscriptsReturn on Assets 9.9% 7.7% -0.3%Return on Equity 19.9% 24.3% 2.2%PE 32.1 25.6 1,309Profit Margin 17.2% 9% 0.1%

Positive NegativeExpanding Global Market Declining U.S. MarketCustomer demand for “better solution” Customer switching costsRegulatory protection Entrenched incumbentsLow Customer Bargaining Power Falling pricesLower Supplier Bargaining Power


Significant barriers to entry

Cerner’s web site claims the firm has cumulatively invested $6.3 billion in research and developmentCustomer switching costs are overwhelming— Large healthcare systems can spend $1 billion or more to change EHRs— Moderate sized health systems (including some single hospital systems) spend $100

to $300 million to switch EHRs— EHR implementations often span 2 or 3 years and are a major organizational

distractionEHRs with large install bases produce very attractive network effects— Ease of Interoperability— Staff/new hire familiarity – reduced training— Third-party products and servicesGovernment Policy Support— CEHRT standard— CMS Billing Rules— Veteran’s Health and Military Health systems— State university medical schools and systems


Where would a new entrant come from?

Startup Large Tech Firm

Niche Vendor Foreign Entrant

Medical Device Manufacturer


Conclusion


Conclusions

New Entrants unlikely

Stable Duopoly

But nothing revolutionary – at least not all at once

Lower prices – and lower costs (for some)

Shift in focus to global markets

1

5

6

But nothing revolutionary – at least not all at once

Incremental improvements in features and functions4

More of your IT budget goes to your primary vendor

Product and service expansions3

Attempts to Renew2


Thank you


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The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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ehr vendor market - nchicacell 781.789.2676. [email protected] • cphims • himss fellow • mba,...

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