Will RECs accidentally wreck innovation in the EMR market on their way to helping small practices?

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?

Newsletter Sign Up

5 thoughts on “Will RECs accidentally wreck innovation in the EMR market on their way to helping small practices?

  1. You can read some lively debate over at EMR and HIPAA on the subject. Actually, I had just finished a post on RECs the day it was posted on John's blog; the biggest dissapoint I had in actually looking over the HITECH specs for an REC was that the priorities seem to be toward helping larger, more established medical centers rather the small-office providers who probably need more assistance in making the transition to HIT.

  2. I agree that REC can be detrimental to consumer choice and innovation. What can industry do to make it easier for small/solo physician practices to decide. Will it really make sense for a solo-physician to work with a large national level EHR vendor or a regional/local specialist with better service terms. In the long run, it may be chepaer to forgo the REC negoiated discounts and opt for someone who will provide better service perhaps at marginally higher cost.

    You mention that out of 300 or soEHR vendors, only 20 or so are 'RFP Viable”. Is it because they lack key MU functionality or becuase of issues with vendor size/financial stability?

    1. Thanks, Ajay, for sharing your thoughts. I agree that it makes sense for solo physicians to see what the RECs are telling them but also understand that RECs are very new to this space — they are non-profits who were able to get the grants but their knowledge about MU, certification, etc. isn't any better or worse than any other groups.

      Also, it's very likely that they will kill the EMR market accidentally for small vendors and that as you suspect everyone will pay the price for fewer more expensive systems. If the RECs actually get their way, startups in the EMR market will never be given the chance to succeed since they won't make the “The List” as Bobby Lee said.

  3. HI,

    The goal of electronic health records (EHR) (and health information technology in general) is to make health care safer and more efficient by providing health professionals and patients alike with information to inform decision-making, promote preventive care and reduce duplication.


Add Comment