Here at EMRandEHR.com, as well as in blogs across the web, we’ve been predicting that this will be the time when the EMR vendor market will begin to consolidate. I stand by that prediction. But I have to admit that the first couple of deals I’ve tracked have turned out differently than I had expected.
Consider the acquisition of Amazing Charts by Pri-Med, a provider of professional medical education to more than 260,000 clinicians. I would have assumed that Amazing Charts would be acquired by a larger EMR vendor to fill out its offering physicians, but instead, Amazing sold to a publishing company with a huge physician base. In retrospect, it makes plenty of sense, but for some reason I didn’t see it coming.
EMR vendor athenahealth pursued a similar strategy recently when it signed a definitive agreement to buy Epocrates, perhaps the most popular mobile application used by physicians today. athenahealth agreed to pay almost $300 million in cash for Epocrates, 22 percent more than what the mobile app vendor’s’ stock was worth on the day in question, in a move that the EMR company concedes tapped out its credit line.
But costly though the deal might have been, athena is getting a lot for its money. Buying Epocrates adds another one million physicians to its comparatively small provider base of 38,000. If you consider the app itself plus the physician users, athenahealth’s investment seems pretty reasonable. When you consider how costly it is to acquire physicians as customers, a deal valuing them at $300 a physician doesn’t sound astronomical to me.
What I’m getting at, bottom line, is that other EMR players are likely to follow the model established by the Amazing Charts and athenahealth deals. I think this approach — buying, rather than begging for, new physician relationships — makes a great deal of sense. What about you?