As I mentioned in another post, I was in Chicago this week for the annual conference of the Healthcare Information and Management Systems Society (HIMSS). I’ve been focussing on opportunities in healthcare IT (HIT) in my role at AlphaDev, and I thought this conference would be a great way to learn more about the role the Stimulus plan will play in HIT and to see all the competitors. I’d say the key take-aways from the conference were:
- Although the press likes to report that $20 billion is being appropriated for incentivizing doctors to adopt electronic medical records (EMR), that’s a net number. The CBO actually plans to spend $36 billion and save $15.5 billion from their use.
- Eligible doctors who can show meaningful use of a certified EMR in 2010 can expect to receive up to $44,000 over 5 years in reimbursements from Medicare, even more from Medicaid. The amount of the reimbursement declines each year, so doctors are incentivized to switch early. Of course, meaningful use and certified EMR aren’t yet defined, and won’t be until the end of this year. That means that 2010 is going to be a horse race.
- I went to the conference being skeptical that the stimulus was sufficient to get doctors to switch. The doctors I know really, really don’t want to give up their paper records. But I left the conference believing that this was going to work. The doctors I talked to were resigned to the fact that this is going to happen. You’re just not going to find a better offer than this.
- I also went to the conference with a list of a dozen competitors I wanted to see and came back with a list of two dozen. The competition in this space during 2010 is going to be fierce. The fisticuffs-in-the-waiting-room kind of fierce. But given the competition, I was surprised to find a substantial variance in pricing. Now that the government has defined the upper bounds of pricing for an EMR, I expect we’ll see these pricing gaps close up.
- Finally, given that there are 200,000 practices in the U.S. and that 75% of them have 10 or fewer doctors, I’m thinking the big players in the EMR space will look to gain market share by buying up the smaller players. So if you’re a smaller player looking for an exit, your primary focus should be market share.
Anyway, that’s the condensed version of the report I wrote up after the conference. I’d love to hear anybody’s comments as I’m still wrapping my head around this space.
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