Epic makes inroads

Plenty of opportunity for new entrants, further M&A probable
By Mike Miliard
11:09 AM

Epic's market share still lives up to its name, but many smaller electronic medical record companies are starting to give bigger firms a run for their money as the industry continues to grow, according to a recent report from Kalorama Information.

The worldwide EMR market reached a staggering $23.2 billion in 2013, according to Kalorama's "EMR 2014: The Market for Electronic Medical Records." That number is only going to go up in the coming years as hospitals and practices seek to evolve their systems' capabilities.

"We think adoption and upgrading activities will still be stimulating growth in 2014-2018," said the report's author, Kalorama analyst Mary Ann Crandall in a press statement upon its release this past month. "As new systems are sold, companies will still earn revenues from existing clients in servicing and consulting services."

Meanwhile, the market is seeing a shift, somewhat, as established giants duke it out and smaller system vendors find their niches.

Unsurprisingly, Verona, Wis.-based Epic continues its dominance, rising from fourth to third place in its market share estimates, according to the report.

"Epic is making inroads into the market and will undoubtedly provide sustained competition for Cerner in this area," said Crandall. "McKesson, although strong in the industry as a whole, seems to be losing hospital market share to some of the other companies more targeted in EMR."

Privately-held Epic has assiduously built its market strength, from just $31 million in 1997 to roughly $1.8 billion in 2013, according to Kalorama – which points to its recent deal with CVS/Caremark, to provide EMRs for its retail clinics nationwide, as another huge win.

"EpicCare's rich platform will allow us to continue to provide the highest quality of care and advance our services through a robust, world class EMR," Andrew Sussman, MD, said in a press statement this past spring.

That statement typifies the impression many providers have of Epic, as the gold standard in the industry.

Still, the study suggests that larger companies like Epic will continue to see pressure from smaller – and perhaps nimbler – vendors.

Kalorama shows that while Epic made slight gains, it did so in part thanks to stumbles by Allscripts, which has suffered from management issues in recent years. Meanwhile, other EMR giants – McKesson, GE Healthcare and Siemens – all lost some market share.

The upshot? The EMR industry is booming but fragmented, with more than half of market share (52 percent) represented by scads of smaller companies – a steep uptick from 42 percent in 2013.

There is still no one clear EMR leader, according to Kalorama, which predicts good chances for new entrants – especially Web-based products – and plenty of opportunity for mergers and acquisitions.

The Kalorama report echoes the findings of another report from this past March by SK&A. That one found EMRs finally gaining significant traction at small medical practices, thanks in large part to the number of choices available to ambulatory providers of all shapes and sizes.

The study, "Physician Office Usage of Electronic Health Records Software," finds that EMR implementation in small offices has jumped more than 10 percent over the past year.

"What has accelerated the adoption of electronic health records among smaller practices is the availability of more than 450 different solutions to fit their practice needs, size and budget," said Jack Schember, senior director of marketing for SK&A, in a press statement.