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Job Growth in Healthcare and the EHR Bubble

Posted on August 11, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

It’s a crazy world that we’re living in today. The market is on a roller coaster. The riots in London. A lot of other crazy things happening. Not the least of which is the high unemployment in the US. Despite the challenging times, I’m not seeing as many of the same challenges in healthcare IT.

This was higlighted in some recent tweets I saw that talked about the job growth that’s happened in healthcare. That’s right, healthcare has actually had job growth. It’s quite amazing to consider, no?

Healthcare IT is especially interesting thanks to the $36 billion in EHR stimulus money. It’s a frother EMR and EHR market out there and I expect the froth is going to continue for another couple years. Is it fair to say that we’re in an EMR and healthcare IT bubble? I think so.

The question I’m starting to consider is what’s going to happen when the bubble pops? I’m not sure that we’re going to see one big pop in the EMR market. Maybe I’m wrong, but I think that we’re going to see a long protracted fall out of EMR and EHR companies. I guess this type of slow failing EMR companies is better than a major pop, but it still doesn’t sound good.

Well, at least it doesn’t sound good for those clinics who are using the EMR software from the EMR companies that fail. However, it’s going to present some interesting opportunities for EMR companies that can clean up the mess that’s left. Of course, most of us won’t know the details of the mess. We’ll just see flowery announcements about EMR companies selling off to larger EHR companies. However, those acquisitions will be a great customer acquisition buy for the EHR companies who have the cash and can transition users effectively to their EHR software.

How far off is this? I’d say at least 2 years. So, the next 2 years are going to be an interesting time for EHR vendors that are trying to position themselves for these types of acquisitions.

Greenway Medical EHR to Go Public

Posted on July 18, 2011 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Today I saw the news that Greenway Medical has filed to go public. The initial public offering was filed at $100 million. You can see the full Greenway Medical prospectus on the SEC website.

I really hate that they use their KLAS rankings in their prospectus. A ranking that an EHR vendor has to pay to obtain shouldn’t be part of what an investor uses to make their investment decision. Of course, if you are an investor who uses KLAS ranking to buy the stock or not, then that’s a different issue.

I also found the EHR market size numbers from the prospectus to be quite interesting:

We estimate the current market for our solutions and services to be approximately $33 billion. We believe our potential customer base includes approximately 550,000 physicians at over 230,000 practices, as well as approximately 3,500 retail and employer based clinics that contain an additional 8,000 providers. Our core EHR/PM solution, PrimeSUITE, serves an estimated $9 billion market. While 41% of the EHR/PM market is penetrated, only 10% of providers fully utilize their installed EHR solution. The markets for certain of our other solutions include $14 billion for our RCM services, $3.5 billion for our data exchange solution, and $2 billion for our speech understanding solution.

I’d like to know where they got these numbers. 41% market penetration is much higher than reality from my experience. However, they may be using a really broad brush to include things like ePrescribing or other partial EMR related software.

The $2 billion voice recognition (or speech understanding if you prefer) market is interesting as well. I wonder what Nuance would have to say about that. Plus, I didn’t even realize that Greenway had a speech understanding solution. I wonder if their product can even compete in that area.

The following is the Greenway Medical financial numbers that were included in the prospectus:

Greenway’s financial performance in recent years includes a $926,000 loss on $38.8 million in revenue in fiscal 2008, net income of $955,000 on $48.7 million in revenue in 2009 and nearly $2.9 million in net income on $64.6 million in revenue in 2010.

Looking at their financials they’re showing a loss for 2011 which seems odd after the previous trends. Plus, we’re in this healthcare IT and EHR bubble and so it doesn’t make sense that they’d have such growth the past couple years and be showing such a loss this year. Unless, they’re doing something with the numbers to delay costs until 2011. Plus, their tax number in 2011 seems off. I’m no expert on these filings, but $30,944,000 in taxes after paying $36,000 the year before seems wrong.

What’s more interesting is that Greenway Medical did $64.6 million in revenue in 2010. Not a bad growth rate from the $38.8 million in revenue in 2008. Plus, we still have a huge part of the EHR market left to adopt an EHR.

Of course, the real question is whether Greenway will be able to really differentiate itself from the other 300+ EHR vendors in the market place. Although, it does seem like the right time for technology companies to do an IPO. Couldn’t be more true than EHR company.