EHR Vendors Brace For The Impact Of Lost Customers, New Black Book Survey Focuses On Replacement Marketplace

Press Release | Black Book Market Research | July 17, 2013

With EHR brand loyalty is at its lowest, usability flaws are driving users to switch vendors despite additional expenses and productivity losses. The defection rate is predicted to hit 20% within twelve months and replacement EHRs now account for 70% of all EHR purchases.

New York, NY (PRWEB) July 17, 2013

Healthcare technology firms on average lose 12% of the their clients annually, according to Black Book Market Research. But as the "Year of the Great EHR Switch" heats up, the average electronic health records vendor can anticipate as many as 38% of their client base taking their business elsewhere. The shift of clients and respective margins is estimated at a staggering $4.5 billion.

Black Book surveyed nearly 900 EHR industry insiders including vendor staff, managers, implementation consultants, advisers, analysts, affiliates and contractors. 51 vendors were represented by the poll responses in the second quarter of 2013.

"It is customary to calculate opportunity costs in business, but the same expressly applies to losing customers and profits in this replacement market environment," notes Doug Brown, Managing Partner of Black Book.

73% of customer attrition in the EHR marketplace currently revolves around perceived usability flaws and lack of client service according to Black Book polling. "Only 12% are being lured into switching because of break throughs in innovation and better product offerings despite what EHR marketers would make you believe," added Brown.

Black Book's "State of the EHR Replacement Market" research discovered that, on average, new physician clients do not become profitable to the EHR firm until their twenty-first month of doing business. Fewer than 61% of EHR customers are now getting past the point of profitability for vendors. 21% of physician practices did not make it through the first year of their EHR relationship, let alone through the vendor's break-even mark. Black Book estimates it will take almost two years with two replacement clients on board to strategically balance the lost revenues and margins of every one established customer that walked away.

Black Book's study authors also claim it is impossible to understand the cost of losing an EHR client without looking carefully at the cost of getting a customer in the first place. The financial reality of customer acquisition in this hectic replacement market environment is that it takes several interactions with a customer before you've even made back the cost of acquiring them and several never make it past the first interaction. "It's rare to find an EHR company that has aggregated its information in a way that gives a good picture of the cost of bringing the customer to the door and getting to a buy decision, but most EHRs have precisely calculated the potential hit to firm profitability as each clients gives notice to terminate contracts," reports Brown.

Despite this high level of competitiveness, there are still technology firms adding EHR products and other technology firms entering the marketplace for the first time. 37% of established vendors reported being "cautiously observing" recent entrants to EHR landscape. Black Book polling revealed Samsung, Care Cloud and AT&T were rated by competitors as the three most formidable new industry vendors.

Vendors also report pumping more funds into marketing budgets in 2013-2014 after 77% of EHRs reported large marketing expenditure cuts over the past twelve months. According to responses from 39 EHRs, the replacement market conditions is triggering 33% of EHRs to forecast marketing and sales spending to double over last year.

The acquisition of replacement market clients is now a major strategic initiative for most major EHR firms. 82% of vendors are avoiding replacement sales efforts to inpatient facilities and 76% are avoiding replacement sales efforts to physician specialists. Rather, most all replacement market sales are targeted at five typical client prospects: hospitals and IDNs acquiring independent practices; large multispecialty clinics and groups acquiring practices, meaningful use underachievers; independent physicians with implementation issues (not hospital or clinic affiliated); and late adopters and laggards (never adopted an EHR).

According to Black Book results, there is much less vendor shifting occurring among medical and surgical specialists. 14% of all specialists with implemented EHRs initially reported the motivation to swap vendors in the late 2012 poll, but 91% now report the financial and operational disruption costs of change too high. In contrast, 28% of primary care practices with implemented EHRs claim to still be shopping for a replacement system.

20% of independent physician practices with ongoing or unaddressed technology issues state they are currently giving consideration to being acquired to expressly avoid EHR and HIE implementations without support.

Hospitals have avoided the full systems swap out, by and large. Black Book recorded 88% of hospital system CIOs wanting fewer vendors, especially in affiliated ambulatory practices to manage. Only 7% of inpatient CIOs anticipate any major EHR system changes in the next 12 to 24 months.

On July 23, Black Book will release the results of a sweeping follow-up survey of 3,000 vendor-swapping physician practices, dissatisfied with original system selections. "The State of the EHR Replacement Market" reveals the top thirty EHR vendors with the highest likelihood of long term viability. An elite group of 8 EHR vendors that scored consistently among the highest client satisfaction ratings on 7 independent 2013 Black Book user polls will be revealed as well. The aggregate findings are comprised from the user experiences of 16,000 EHR users across 550 EHR vendors including:

  • Physician Productivity & Practice Satisfaction across all group sizes: Solo to 100+ doctors
  • Physician Practice Satisfaction across medical & surgical specialties + primary care
  • Meaningful Use 1 Achievement, Attestations, CPOE and e-Prescribing
  • Meaningful Use 2+ Advancements, including Patient Portal and Interoperability
  • Mobile Apps (iPad and Phone)
  • Connectivity (HIE)
  • Practice Management Advancements, including Revenue Cycle changes & ICD10

Black Book is recognized globally as the unbiased, independent source for polling, surveys, market research, competitive analysis, opinion mining and customer satisfaction results across industries and the information technology sectors.