EMR Market Pegged At $15.7 Billion In 2010EMR Market Pegged At $15.7 Billion In 2010

17 Leading EHR Vendors

While the electronic medical record (EMR) market grew at a slower pace than expected, the value of the market for 2010 was $15.7 billion, according to a report from Kalorama Information.

Kalorama, a market research firm that tracks trends in medical technology, said the growth rate of 10% in 2009 and 13.6% in 2010 was lower than its predicted 15% growth for both years. The slower pace of EMR adoption was the result of confusion on the part of physicians about meaningful use guidelines. However, much of that uncertainty was dispelled last summer when the final rules for meaningful use guidelines were published.

Nevertheless, the report, "EMR 2011: The Market for Electronic Medical Record Systems," found that considerable growth did occur, with physician usage of EMRs now nearing 50%. Kalorama Information predicts that further adoption and upgrading activities will accelerate during the next 24 months. Health IT vendors will realize revenues not only in the purchasing of new systems, but also from existing clients in servicing and consulting. Based on the survey's findings, Kalorama expects over 18-20% market growth for the next two years.

"We think that while progress was made in physician adoption and in vendor sales, there is still a lot more potential," Bruce Carlson, publisher of Kalorama Information, said in as statement. "There are still a considerable number of physicians who need to be fully functional and hospitals that have to improve their stage ranking."

The report, which relied on interviews with more than 22 key industry officials, consultants, healthcare providers, and government personnel, includes revenues for EMR and computerized physician order entry (CPOE) systems and directly related services such as installation, training, and consulting, which are key revenue-generating areas for health IT vendors.

Health IT Boosts Patient Care, Safety

Kalorama's report echoes that of another survey published in February by the Healthcare Information and Management Systems Society (HIMSS), which interviewed 326 IT executives representing nearly 700 hospitals. The survey found that 68% of respondents said that they were going to make additional IT-related investments to position their organization to qualify for incentive payments.

The Medicare and Medicaid electronic health record (EHR) incentive programs were established by the Health Information Technology for Economic and Clinical Health (HITECH) Act, part of the American Recovery and Reinvestment Act of 2009. Under HITECH, Medicare and Medicaid incentive payments will be available to eligible professionals, eligible hospitals, and critical access hospitals (CAHs) when they adopt certified EMR/EHR technology and successfully demonstrate "meaningful use" of the technology in ways that improve quality, safety, and effectiveness of patient-centered care.

Kalorama's projections assume that EMR usage will continue to increase, as hospital EMR adoption will encourage physician adoption, current EMR stage 3 hospitals will purchase more advanced systems, and current EMR owners will upgrade.

EMR IT spending will also be spurred by the threat of penalties in 2015, in the form of reduced payments from the Centers for Medicare and Medicaid Services (CMS) for those that do not engage in meaningful use of EMRs, will force doctors and hospitals to upgrade their systems.

"The stick is stronger than the carrot when it comes to the ARRA incentive-penalty equation," said Carlson. "We continue to believe that and we think it's the industry's consensus as well. While the policy already picked up those oriented towards technology, the penalties will force conversion and upgrading in the future. And those decisions will happen in the next two years, before the penalties kick in."