The Federal Government is granting hundreds of millions of dollars to Regional Extension Centers (called “RECs” and pronounced like “wrecks”) to help small physician practices benefit from healthcare information technology solutions. RECs are designed to offer consulting and technical support to help accelerate adoption of Electronic Health Records (EHRs). The purpose of the RECs is to provide guidance on which products to buy, help reduce prices of software through group purchase agreements, and give technical assistance on implementation and deployment. These services will mostly be free of charge or will cost very little to procure. I asked Bobby Lee, principal at eRecords, who has a good deal of knowledge about the Regional Extension Centers program to share his thoughts on the RECs and how they will impact the EMR market itself — he sent me a guest article entitled “Let me be on your list! How RECs will influence EHR vendor landscape” but I switched the title to “Will RECs accidentally wreck innovation in the EMR market on their way to helping small practices?” because I thought it was more provocative and might foster some debate. Here’s what Bobby had to say:
There are EMR shopping lists being created across the country – about sixty of them. Whether or not your favorite EMR vendor makes these lists may determine the vendor’s future viability.
Let me explain.
HITECH Act established Health Information Technology Extension Program which in turn established Health Information Technology Regional Extension Centers (REC). ONC awarded 60 RECs across the country in two rounds of funding (first on 2/12/2010 and second on 4/6/2010) totaling $642 million. Collectively RECs are charged with getting 100,000 priority primary providers (PPCP) to “meaningful use” within 2 years.
These funds are directed for technical assistance and not allowed to be used for purchase of software licenses or any hardware.
So, these sixty Regional Extension Centers are faced with the challenge of guiding 100,000 PPCP to the promise land of Meaningful Use in less than 2 years. EHR is the tool the PPCP must use to achieve Meaningful Use. Given that the #1 barrier to adoption of EMR is cost (by most accounts), the natural tendency is to create a collective bargaining setup similar to Group Purchase Organizations — gather up as many customers (PPCP) as you can, negotiate on behalf these customers with vendors (EHR vendors) with the promise of attentive customers and thus easier sales to vendors.
For this to really work, the list of EMR vendors should be shorter rather than long and value proposition clearly spelled out (who gets what) between all the parties.
Add to this the requirement of ONC for all the RECs to work together and drive toward best practices should enable an environment of sharing amongst the RECs (e.g. similar EHR vendor selection process) such that fewer and fewer vendors should appear on the list ACROSS all RECs. I also believe there’s probably only 20 really “RFP viable” vendors out there for RECs out of 300 (or however many that’s being quoted lately) so called EHR vendors in existence today. These “RFP viable” vendors must be a player in the market with solid experiences ACROSS the States with enough cash and resources to invest ahead of the potential returns as dictated by the terms of agreement RECs will likely negotiate.
In terms of numbers, I guesstimate RECs collective influence at about $100 to $400 million per year (Assume 80% of PPCPs will need to purchase licenses and it costs $100 to $500 per month per provider). On top of that, good portion of the $642 million awarded to RECs will be spent on supporting the work forces across the country learning and doing the work with the EHR vendors that makes the list.
The natural force of RECs driving the “crowdsourcing” takes over and at the end of few cycles (e.g. stages 1, 2 and 3 of MU requirements), three to five vendors will bubble up to be the “it” vendors. If they don’t screw up too much, the infusion of licenses & revenue will further drive the divide between the “haves” and “have-nots” and will further solidify the vendor landscape with less number of EHR vendors in the market place.
What do you think?