News Feature | February 13, 2015

EHR Market Impacts How Hospitals Invest In HIT

Katie Wike

By Katie Wike, contributing writer

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According to a recent report, hospitals will likely be changing how they invest in health IT due to a shift in the EHR market.

A new report from Frost and Sullivan predicts a change in how hospitals invest in health IT is coming as a result of a maturing EHR market. EHR Intelligence reports the recent shift in the hospital EHR market reflects transformations in healthcare consolidation and reimbursement.

“Hospitals understand they must establish new business models in order to survive under a dramatically transformed provider landscape,” said Frost & Sullivan Connected Health Principal Analyst Nancy Fabozzi in a press release. “Most impactful will be cuts in Medicare reimbursement required by the Affordable Care Act as well as the shift to value-based reimbursement by commercial payers. Additional concerns are the growing competitive pressures from retail pharmacy clinics and third-party telehealth providers as well as the rise of the health insurance marketplace that requires individuals to select their own health plans and provider networks.”

Key findings of the study include:

  • US HIS market was valued at $11.1 billion in 2013 and expected to grow at a compound annual growth rate (CAGR) of 5.7 percent between 2014 and 2020.
  • Total market revenue is expected to increase steadily, reaching $17.6 billion by 2020, representing a 58.9 percent rise from 2013.
  • Administrative information systems will be the fastest growing market segment with a CAGR of 10.4 percent over the forecast period.
  • Financial information systems will follow, registering a CAGR of 9.7 percent over the same period.
  • Clinical information systems will grow more slowly than the other segments with a CAGR of 0.6 percent.

Hospitals report that a major focus of investment in the next one to two years is health information systems. This is driven by reimbursements which are based on quality and efficiency. “Provider consolidation and increasing demand healthcare services are expected to influence IT implementations more dramatically as EHR data increases in volume and hospitals work to contain costs and participate in new value-based reimbursements care models,” explains EHR Intelligence.