The healthcare IT world has seen a lot of movement and investment lately. Kareo raised $55 million recently. Modernizing Medicine acquired gMed last month. Accolade secured $22.5 million in funding. medCPU closed $8 million in financing. BoardVitals raised $1.1 million to build the Wikipedia of Medicine. Premier acquired CECity. Plus, that doesn’t even mention the $1 billion acquisition of Merge healthcare by IBM. I’m sure that there are many more that people can share in the comments.
There’s a lot of investment going into healthcare IT. No doubt there’s a huge opportunity for health IT companies. However, I’ve been most interested in what’s happening with the EHR companies involved in these deals. For example, one recent transaction that I didn’t mention above was Marlin Equity Partners acquiring AdvancedMD from ADP. The ADP acquisition of AdvancedMD never seemed to work. The idea of doctors offices being small businesses and ADP offered a bunch of small business services kind of made sense, but most doctors offices treat their EHR purchase very different than other tech investments for their office. The EHR purchase is its own beast. So, it’s not surprising that ADP would divest itself of an EHR software company.
What’s more interesting about the deal is that Marlin Equity Partners had already acquired EHR vendor e-MDs in March of 2015 and merged it with MDEverywhere. Now Marlin Equity Partners has e-MDs and AdvancedMD under their umbrella. I asked them what their plans were now that they had two EHR vendors (competitors) in their portfolio. They declined to comment until the acquisition of AdvancedMD closed.
Something has to give. I can’t imagine Marlin Equity Partners continuing with two software companies. Hard to say whether e-MDs will win or AdvancedMD, but I expect we’ll see one of them being sunset in the next year or two. They’ll offerer a way to convert from one to the other, but switching EHR software is never fun. It’s even less fun when it’s being forced upon you by the vendor.
The crazy thing is that I think we’re just getting started with this kind of activity. 300 EHR vendors is not sustainable long term. I don’t think we’ll get to 5 EHR vendors like most suggest, but we could narrow it down to 100 and still have plenty of options. That’s a lot of doctors being left high and dry when their EHR gets consolidated.