Large Versus Small EHRs: The Debate

A few days ago, I participated in an online debate, which you can struggle to hear here. The debate was hosted and moderated by HCP Live, publisher of MDNG and other journals for healthcare professionals, and was framed around the following question: “Small vs. Large EHR Vendors: Which Is Best for Your Practice?”

As founder and president of Amazing Charts, I represented the small EHR vendor (although I’m not sure why, since Amazing Charts has more unique practice installations than NextGen, Sage, and most other “large” EHR companies). My opponent was Justin Barnes, representing large EHR vendors as chairman of the HIMSS EHR Vendors Association. He is also the vice president of marketing, corporate development, and government affairs at Greenway Medical Technologies.

Justin is a pretty polished guy who speaks beautifully and has experience testifying before the U.S. Congress. Yours truly is a bit rougher around the edges, and I tend to think more about physicians than politicians. While Justin played his role of industry booster, I played my role of industry skeptic/curmudgeon. This difference in our perspectives came through clearly in nearly every question.

One person asked if the expression “you get what you pay for” is true for EHRs. Justin agreed that generally speaking, yes you do get more value when you pay more for a system. I emphatically disagreed, pointing to recent EHR user surveys that show an almost inverse relationship between the cost of an EHR and its usability ratings. In general, the more costly an EHR, the more complex and difficult actual EHR users tend to find it. (Check out these studies, for example.)

We even disagreed about what defines a “costly” EHR. Justin thinks $1,000 per month per provider is a perfectly reasonable cost for an ambulatory EHR. I think that sum is outrageous. Amazing Charts costs just $995 per provider (one-time charge), and then $500/year for maintenance, technical support, ePrescribing, and essentially everything else. They want $12,000 a year, or more, in perpetuity. Seriously?

Assuming that “large” and “small” EHRs are equally certified (both Greenway and Amazing Charts, for example, are currently CCHIT Certified to the same standards for ambulatory EHRs) and are equally eligible for stimulus money, then what is the difference? It certainly isn’t that the more expensive EHR is better. Again, study after study of EHR users show that the less expensive EHRs consistently get rated easier to use, and have a significantly higher customer satisfaction rating than their “larger” competitors. So if not the quality of the EHR, and not the capabilities of the EHR, then what explains why most EHR vendors charge so much for their software?

I think the reason is simple: greed. Unfortunately, greed often has a negative connotation, and I don’t mean it to. Perhaps a better way to say this is that “large” EHR vendors are focused on doing right by their shareholders, while “small” EHR vendors are more focused on doing right by their users. Let’s look at the facts.

The largest EHR vendors are public companies whose main focus is growing profits, quarter in and quarter out. These companies have massive expenditures associated with being public and live or die based on how Wall Street and institutional investors perceive them. It doesn’t matter how much or how little their users like them – so long as they can use marketing hype and large hospital and group deals to continue to generate revenue.

Most of the private EHR vendors are similarly beholden to shareholders, albeit they don’t have to publically disclose who these shareholders are. These companies have taken money from private equity investors, venture capitalists, and other financial partners who ultimately call the shots. The “exit strategy” is what it is all about – and the VCs aren’t in it to improve the physician’s existence or solve healthcare problems, they want to know how and when they are going to see spectacular returns on their investment. Since they hope to either sell their company to a bigger fish, or bring their company public, they need to squeeze maximum profit margins out of these companies – since that is what it is all about. This, of course, translates directly into higher prices for physicians.

It should therefore come as no surprise that those people who lead most large EHR companies, as well as the leaders of the “small,” VC-funded EHRs, have nothing to do with medicine. These companies are not led by physicians who understand what it is like to try to make ends meet in a practice that must see too many patients a day. These are people from investment companies, tech companies, and other financial firms, and make no mistake about it – their #1 priority is to make money for their shareholders.

Let’s look at some examples. Allscripts-Mysis (MDRX) is one of the biggest of the big boys, and has grown by gobbling up smaller VC-funded EHR vendors. They had revenue of 548 million in 2009, of which more than half was profit! Their main shareholder? Fidelity. And according to the bios listed at morningstar.com, not a single person on Allscripts board of directors is a physician. Not one of their “key” executives (CEO, President, etc) appears to be a physician either.

NextGen (QSII), another huge player, made 246 million in 2009, of which more than half was profit too! Their leadership list is here. It is fascinating to look at the bios of leaders of the expensive EHR (the low priced EHRs apparently can’t afford a webpage with a list). Who leads the company clearly explains the difference in EHR price. Check out Centricity, Sage, and Greenway’s leaders. (Sorry Justin, nothing personal – but your board of directors is like reading the who’s who of the Venture Capital market).

Now don’t get me wrong. I am as much of a capitalist as the next guy – and my goal in running a business certainly includes making a profit, but I think a more logical and worldy approach is a concept I’ll call, “kind capitalism”. Kind capitalism is being fair but still making a profit.

When applied to Amazing Charts, it means we will charge a reasonable price for our product. A price that covers our expenses and development plans, plus makes some extra too. Kind capitalism is not charging so much that a physician has to take out a loan to afford an EHR while half of every dollar made is profit. Kind capitalism is being fair in all aspects of ones business dealings, and really is just an extension of the Golden Rule to capitalism: Do unto others as you would have others do unto you. Not because God tells us to. Not because we believe that Marxism is a better answer. Just because it is being fair. And acting fair, promotes fairness, while being greedy promotes greed. There must be a happy medium.

Call me naive (many do), but I believe building the best EHR I can build, and providing it fairly, is the first tiny step in changing the healthcare system (and eventually the world). The next step? Watch out UnitedHealth…