Tag Archives: EHR

SPI Digital Health: Western Australia and Tasmania Begin their State-Wide EMR Journeys

Following in the footsteps of other Australian states, Tasmania and Western Australia (WA) recently provided details of their plans to implement state-wide electronic medical records (EMRs) for the first time. 

Earlier this month, the WA government said an A$100M (US$65M), first phase state-wide hospital EMR rollout would include a digital medical record with single sign-on technology and virtual desktop infrastructure at around 80 public hospitals.  

This first phase is part of an A$1.2B (US$782M) digital infrastructure and public hospital capacity upgrade programme in Western Australia. There is, at this stage, no indication of when the first phase contract will go out to tender or be awarded. 

WA’s announcement comes weeks after Tasmania issued a request for proposals (RFPs) for its first state-wide EMR and ambulance electronic patient record. The A$150M (US$97.8M) first phase will, the state government said, be rolled out over four years. It is part of an A$475M ($309.6M), decade-long digital health programme on the island. 

The Signify View 

It was only a matter of time before WA and Tasmania embarked on their journeys towards state-wide EMRs. Signify Research described in this recent Insight how the move to state-wide contracts was shaping the Australian EHR market in 2023, and confirmation that these states are now moving forward reinforces our view. 

The seeds of WA’s EMR plans were sown in 2019 when the state government published its digital strategy vision. A state-wide EMR lay at the heart of this vision, and the state government has set a July 2029 target to have a ‘functional’ system in place. Implementation will take place in four phases, although it is unclear at this stage when vendors will be invited to submit requests for proposals (RFPs) for the first phase contract. 

Tasmania’s story is similar in many ways. The government in Australia’s second-smallest state published its digital health transformation strategy 18 months ago and, as in WA, a state-wide EMR is a central pillar of this. Tasmania, however, has higher aims: it sees an EMR as being the key to creating the first fully-integrated healthcare system in Australia. 

Land of Opportunity 

Tasmania’s goal to establish the country’s first fully-integrated healthcare system is bold but viable. The state’s current system is rudimentary, with most health record inputs still done manually. There is no installed EMR base on the island, although there is a basic patient database that was implemented more than a decade ago by iSOFT (which later became CSC, DXC and now Dedalus). Tasmania has just four large state hospitals, 14 regional hospitals, seven private hospitals and 144 primary care practices with fewer than 1,000 GPs in total. 

Contrast this with other, much more populous states in Australia, like New South Wales and Victoria, which have various iterations of EMR systems spanning more than a decade in some cases. In Tasmania, with a population of little more than half a million, putting in place a system that seamlessly connects hospital and primary care EMRs should therefore be relatively achievable. But, as state-wide EMR deployments in other Australian states have demonstrated, there are clear challenges. 

Inflation’s Curse 

One immediate challenge facing both WA and Tasmanian rollouts is inflation, which ran at 7% for the year to March. Although it is starting to ease, inflation will impact project budgets, scopes and vendor margins. A$100M (US$65M) in WA and A$150M (US$97.8M) in Tasmania will not stretch far in the current high inflation environment and, in other state-wide deployments elsewhere in Australia, funding top-ups have been needed.  

In WA, another challenge is its sheer geographical size. It is the country’s largest state by some distance, and so state-wide EMR implementation in often remote hospitals presents immediate logistical hurdles. Once the EMR is in place, providers in WA face the additional challenges of patient engagement, especially in remote communities that lack good communications networks. 

Muscle Flexing 

Despite their relatively modest value, the contracts in WA and Tasmania will be seen as another good opportunity for international vendors to flex their muscles and experience on state-wide programmes. In WA we’d expect to see the usual cast of contenders to include Epic, Oracle Cerner, Altera, and, InterSystems and MEDITECH, all of whom have experience (both good and bad) on Australian state-wide contracts. These names will probably also be in the frame in Tasmania, but there could also be interest from Telstra, in partnership with Alcidion, a UK-based data aggregator and Dedalus, which also has a sizeable Australian footprint. 

Any involvement by Telstra would be significant in the sense that Australia’s leading EHR vendor (by revenue) has never been involved on a state-wide contract, focusing instead on individual hospital, ambulatory and long-term care markets in Australia where it is the undisputed market leader. Given Tasmania’s goal to create Australia’s first fully-integrated system, and without the ‘baggage’ of legacy EMR systems in other states, Telstra might see this a good opportunity, particularly with its portfolio of integrated care and PHM offerings. 

Among the other vendors who will be competing in both WA and Tasmania, Oracle Cerner may feel it has a point to prove, having lost out last November to arch-rival Epic on a massive triple-digit-million dollar contract in New South Wales. This 220-hospital contract includes the replacement of nine legacy Cerner and Orion Health EMRs and six Cerner and Dedalus (legacy DXC) patient administration systems. Oracle also lost out to Altera in Victoria on a large health information exchange (HIE) project. 

Signify Research stated last month how Altera would need to leverage its position in both Victoria and South Australia (where it is rolling out its Sunrise EMR and PAS solutions) to grow its business elsewhere in the country. WA and Tasmania could be a route forward, 12 long years after winning its Sunrise EMR deal in South Australia. 

InterSystems, which is delivering the first phase of its A$259M Acacia EHR system state-wide in the Northern Territories is also competitively placed on the two new state contracts up for grabs. 

The principal challenge for all vendors in Australia is how to compete with Epic, which continues to gain share in the country at others’ expense. While winning the big New South Wales contract from Oracle Cerner is arguably Epic’s most audacious move in Australia, there are also parallels between Tasmania and its state-wide contract in the Australian Capital Territory (ACT). Like Tasmania, ACT is relatively small in size and population, and at A$151M the contract size is similar to Tasmania. It is reasonable to assume Epic will be in the running both here and in WA. 

Death Knell? 

Although there has been no state-wide EMR procurement in WA or Tasmania until now, there has been intense competition to win new EHR contracts in both states, particularly as hospitals build on the functionality of legacy PAS solutions. EMRs have been procured via individual contracts with hospitals and local health networks. A different set of vendors tend to compete for these smaller acute contracts. For example, Telstra Health, Altera (specifically via its Australian-acquired operation Core Medical Solutions), InterSystems, InfoMedix and Alcidion. In the move to state-wide EMRs in WA and Tasmania, smaller vendors could be left out in the cold unless they partner up (e g like Telstra and Alcidion), particularly in the public hospital market (there will still be opportunity in the private market). 

Greenfield Opportunities 

By global standards, Australia is a relatively small, yet mature EHR market, where administrative and operational EHR implementations are advanced, and a transition to clinical systems and data integration and information sharing is now driving growth. 

The fact that WA and Tasmania are only now moving to state-wide contracts is a bit of a throwback to several years ago when the first state-wide EMRs were being established in other states. International vendors have not found state-wide implementations easy given integration and localisation challenges, but these experiences will be valuable now. Telstra, too, may feel it is time to flex its muscles and local knowledge for the first time on state-wide implementations, with Tasmania the obvious option.

SPI Digital Health: EHR Vendor Financials Q1 2023

Although high inflation continues to cast its shadow over health systems, hospitals and primary care practices in the US and Europe, Middle East and Africa (EMEA) markets, Q1 2023 financial results provide evidence that major hospital IT initiatives are positively impacting vendors.  

The latest figures also offer two further takeaways: one, that lacklustre growth among the three listed vendors we track belies an otherwise healthy US inpatient EHR market; and that the revenue gap between tier-1 and tier-2/tier-3 primary care vendors in the US continues to widen, likely irreversibly. 

Revenue Performance for Select Public EHR Business Lines/Vendors

Source: Signify Research

Inpatient US: Revenues Modest, but Don’t Tell Wider Story 

Of the three companies we track in terms of public financials, revenues fell on average 3% over 12 months, and there was zero year-on-year (y-oy) growth in the last quarter.  

Altera, which generates 95% of its revenues from the US inpatient market, saw its Q1 2023 revenue drop 5% from the from the same quarter in 2022, and 9% over a rolling 12-month period.  

Oracle Cerner’s Q1 2023 revenues were up 3% on Q1 2022, but down from Q2 2022, the quarter when it broke the $1.5B revenue barrier for the first time with a sudden spike after many quarters of near-zero growth. We attributed that to the ‘Oracle effect’ following its acquisition of Cerner in 2021, but the ongoing saga of its $10B Millennium EHR solution contract for the US Department of Veterans Affairs (VA) weighs on its financial performance. 

What should have been a flagship project has instead descended into a catalogue of delays, frustrations, technical problems and statements. In February this year, and in response to calls to shelve the project, Oracle Cerner issued a statement arguing that the VA should push ahead with it, and in the same month signed a contract with Accenture to provide extra EHR training for VA clinicians. However, the project took a dramatic turn for the worse last month when the VA suspended the rollout, insisting it would take as much time as necessary to fix the problems. This will be a drag on Oracle Cerner’s revenues going forward. 

The rather muted quarterly revenue performance of the public companies tells only part of the story. The US inpatient EHR market is otherwise in good shape, with no shortage of fresh investment in US hospital EHRs. Larger hospital networks continue to subsume smaller facilities, playing into the hands of larger vendors who are better equipped to serve larger systems and IDNs. Epic and MEDITECH, which are private companies and do not appear in this analysis, are both gaining market share at the expense of the likes of Altera and Oracle Cerner. 

In this environment, one must fear for CPSI’s long-term prospects.  Its customer base is almost exclusively small hospitals. While it reported 2% y-o-y revenue growth in Q1 2023 compared to Q1 2022, it was down 2% y-o-y for the 12-month rolling total, and there must be questions over its ability to compete in the long-term.  

Another emerging story in US impatient EHR is the impact of the 21st Century Cures Act. This legislation requires healthcare providers to upgrade their EHRs to be FHIR-compliant so that data can be shared with other EHRs. This will inject growth in the inpatient market, leading to a general trend of EHR solution upgrades. However, at this point, Epic and MEDITECH are the only two vendors to capitalise on this. 

Primary Care US: The Good Times Roll On  

It was another solid quarter for primary care vendors in the US. As with  inpatient US, size is becoming increasingly important here too, and there is a growing ‘revenue rift’ between the ‘big 7’ (Epic, Oracle Cerner, NextGen, Veradigm, eClinical Works, Athena and Altera) and the long tail of tier-2 and tier-3 vendors. 

The 21st Century Cures Act could be the final blow for very small players who lack the resources to develop EHR solutions that adhere to the Act’s requirements. Increasingly, providers are also looking to consolidate their IT for practice management, revenue cycle management, patient engagement, booking management and patient records into one solution, and again this presents challenges for the smaller vendors. At the same time, small primary care practices are being bought by larger networks bringing different settings under one roof, and who need a single EHR that can serve these different settings. Again, this conspires against the small vendors. 

On the other hand, CompuGroup Medical (CGM), NextGen and Veradigm all posted good growth (although Veradigm’s numbers will potentially be revised). CGM reported 16% y-o-y growth for its North American operations in 2022 (this business largely comprises eMDs, its December 2020 primary care EHR acquisition). NextGen is 10% up on the rolling 12 months metric and Veradigm 5%. These, and the privately-owned larger vendors, continue to mop up the long tail of independents.   

CareCloud is the clear outlier. A tier-2 vendor, it focuses exclusively on primary care. Its business picked up well in 2019 and 2020, peaked in 2021 and fell away in 2022. Its Q1 2023 revenues were down 15% on the previous quarter, and 8% over 12 months, symptomatic of the difficulties smaller vendors have in a market where resources and scale matter more than ever. 

Inpatient EMEA: Trickle Down Effect Begins  

The latest figures indicate that contracts serving the 3B Germany Hospital Futures Act (KHZG) initiative are finally finding their way to vendor spreadsheets. Signify Research reported from last month’s DMEA show in Berlin (read the Insight here) how vendors were waiting for revenues to flow, and this is now happening.  

CGM reported 10% y-o-y growth for its inpatient HIS business in Q1 2023, but vendor performance is healthy across the board as a strong pipeline of state healthcare IT projects are implemented across EMEA. Comarch recorded 16% growth of the rolling 12 months metric, although its Medicine segment was down 15% over the same period; Nexus (focused on Germany/Austria/Switzerland and the Netherlands) was 11% up on the quarter and 13% over the rolling 12 months; and the TietoEVRY Care business line 11% on the quarter and 6% over the rolling 12 months (achieved despite losing big contracts to Epic and Oracle Cerner in the Nordics). 

In upcoming quarters vendors serving KHZG contracts can expect to see further revenue spikes. A similar, albeit less well funded, scheme in Italy will also deliver revenues later this year. 

Primary Care EMEA: A Mixed Bag 

As in previous quarters, primary care EMEA markets are evolving on a country-by-country basis. The most striking developments are in France, where in Q1 2023 Cegedim Sante and Equasens posted 40% and 14% y-o-y growth over the same quarters in 2022 respectively. This is a direct impact from the Ma Sante 2022 investment programme. 

In contrast, CGM-AIS and Cegedim-International both reported 4% quarterly growth over the same period in 2022. EMIS has not posted investor updates since the news broke that Optum was looking to acquire the business. However, its latest financial report also illustrates that its EHR focused business has struggled recently. This is explained by both Cegedim-International and EMIS Health working predominantly in the UK and the low levels of growth in primary care spending there at present. 

CGM-AIS’s modest growth also reflects the relatively low levels of primary care spending growth in Germany, one of its focus markets (along with Italy, France and Eastern Europe). 

Brighter Outlook 

In our last analysis of EHR vendor financials in March, Signify Research stated that many saw 2023 as being tougher than, or at best similar to, 2022. While the economic outlook remains challenging and inflation is still running high, there are grounds for heightened optimism in 2023, for larger vendors at least.  

The fact that the funding for post-Covid recovery and resilience projects across EMEA, and new legislation in the US spearheading EHR upgrades, are not only in place but also translating into revenues, will be welcome news. 

Click here to view full public vendor financial data. 

SPI Digital Health: Epic Eyes German Debut at University Hospital, but Outcome Anything but Academic

The rumour mill was in full flow at DMEA 2023 in Berlin this week as talk revolved around Epic’s ‘imminent’ debut at a prestigious academic hospital in the German capital.  

There is plenty of substance behind the rumours. German Health Minister Dr Karl Lauterbach has, in recent weeks (including at DMEA), publicly stated his view that German hospital IT is much inferior to US hospital IT. And Dr Peter Gocke, Chief Digital Officer at Charite – Universitatsmedizin Berlin, the hospital in question, recently referred to ‘upcoming Epic upheavals in the German HIS landscape’, talking glowingly of the ability of highly integrated systems such as that offered by Epic to contribute significantly to digitisation. These words will resonate strongly in a country in the midst of a multi-billion dollar hospital digitisation programme. 

If rumours of Epic’s impending entry – which would see it replace Oracle Cerner at the Berlin hospital – are true, what will it mean for incumbent vendors in the country? And what are Epic‘s chances of success? 

The Signify View 

That one of global EHR’s biggest names is allegedly poised to debut in one of Europe’s larger hospital IT markets would always attract attention. But Epic will not suddenly start rampaging through the 2,000-plus German hospitals in the market. There are many forces at play in German hospital IT, few of them in Epic’s favour at present.  

With vendor attention trained on the German Hospital Futures Act (KHZG), the more interesting angle here is not Epic, but rather Oracle Cerner’s increasingly precarious position in Germany, and the threat it faces from vendors ready to exploit any chinks in its armour. 

Chickens Come Home  

Oracle Cerner’s German predicament goes back to SAP’s decision last year to withdraw support for i.s.h.med in 2030. We wrote in this Insight in late 2022 how the decision would cause widespread concern among Oracle Cerner’s i.s.h.med customers about the future of the solution. We also stated how, unless Oracle Cerner moved quickly to reassure its customers that it had a contingency plan for i.s.h.med, then other vendors would swoop to fill the vacuum.  

Remarkably, Oracle Cerner has still not publicly stated (and DMEA would have been an ideal opportunity to do so) its intentions for i.s.h.med (although awkward private conversations will be happening with customers on possible long-term visions that would provide a solution). And, in light of this, and as Signify Research predicted, vendors are now moving in on some of Oracle Cerner’s 250-strong hospital customer base.  

But Epic, Oracle Cerner’s nemesis in the US and so many international markets, will not be a big player in this.  

Epic Extravagance 

There are a number of reasons for this. Firstly, despite being held up by German healthcare leaders as something of a ‘poster child’ of hospital IT, Epic is expensive. A survey conducted by DigitalRadar shows German hospitals allocate just 2.4% of their annual operating costs for IT spending, compared with around 8% in the US.  

Epic is therefore an extravagance afforded by a select few in Germany – prestige facilities like Charite – Universitatsmedizin Berlin for example – and very large hospitals and associations. In time, market leaders like Dedalus and Oracle Cerner might lose the occasional bigger, better-resourced academic hospital to Epic, and likely must also begrudgingly accept losing sites that make up the long-tail of their customer bases.

The Health Minister’s recent comments about German hospital IT infrastructure did not go down well among vendors in the country, however. They argue that they would love to be able to sell more sophisticated solutions like Epic’s into German hospitals if only the hospitals had the budgets of their American counterparts. 

Another reason why Epic will struggle to make headway in Germany is the fact that KHZG has been such a strong focus of German hospital IT development and investment over the past few years. Vendors have spent years aligning with the various technical criteria needed to fulfil the 11 IT pillars around which KHZG funding is allocated. Much KHZG money will be spent in the next two years, and Epic has missed the boat. 

Commentators often also refer to the fact that Epic already has one, and soon to be two, German-language customers via contracts in Switzerland, and that it would therefore be a relatively quick step to localise EpicCare for Germany. However, the regulatory environment in Germany is vastly different to that in Switzerland and the localisation effort to achieve a workable solution should not be underestimated. Epic will be cognisant of this, having rushed localisation in other European countries (e g Denmark and the UK) over the last 10 years, and subsequently faced significant backlash from those local customers.    

Exploiting Weaknesses 

As stated, the incumbent vendors (see Figure below) will be concerned less about Epic and will be more interested in how they can capture some of the 250 i.s.h.med contracts from Oracle Cerner. Some are manoeuvering into position. CompuGroup Medical (CGM), which acquired parts of Cerner’s (pre-Oracle acquisition) healthcare IT business in early 2020, has some 550 hospitals across its Clinical and Medico (ex-Cerner) product lines. At DMEA this week it launched the third-generation iteration of its Clinical product line. One component specifically targets workforce management and billing (the SAP element of i.s.h.med) and will be targeted at existing i.s.h.med customers.  

Dedalus (the market’s dominant player), Meierhofer, Telekom and others also offer competitively-priced EHR solutions that will interest a customer base rapidly losing faith in i.s.h.med. 

Cerner Clock Ticking  

Oracle Cerner’s response has been two-fold. One, it promises that the clinical elements of i.s.h.med will be able to operate with third-party elements that could replace the functionality offered via SAP. Two, it has also a longer-term vision for its i.s.h.med, Soarian and Millennium EHR products under the broader Oracle Cloud Infrastructure (OCI) umbrella.  

According to the company, OCI is ‘a set of complementary cloud services that can run a range of applications and services in a highly available hosted environment’. But it is unclear when this more modular solution will launch. Elements of this solution will start to be available over the next 12 months, but at what point a solution that could be leveraged by its i.s.h.med customers becomes available is still unclear. And time is not on Oracle Cerner’s side in this market – its i.s.h.med customers are looking for clear guidance now.  

Nor is Epic’s timing necessarily good in Germany should the Berlin contract come to pass. Given vendors’ positioning around KHZG, Epic will not be able to disrupt such an established ecosystem. It could be years before it can.  

Despite relative success on large regional contracts in various geographies, Epic’s track record on one-off deployments isn’t great either. There are several examples of Epic deployments that have run into dead ends as the firm struggled to localise workflows. 

Charite – Universitatsmedizin Berlin is not yet a done deal – no formal tender has been issued – but the signs are that Epic is in the box seat. According to insiders, preliminary documents (where vendors register interest in tendering) include specifications weighted in Epic’s favour, and exclude specification that would rule Epic out 

Any Berlin contract, then, would be quite valuable for Epic financially, as well as being good PR. While the optics are far less positive for Oracle Cerner, at least KHZG funding rules dictate that providers cannot use the money to strip out and replace legacy EHR systems, and so i.s.h.med at least has a stay of execution.  

But over the next 12 to 24 months the potential move away from i.s.h.med will be watched closely, and it remains to be seen the extent to which OCI will be Oracle Cerner’s saviour in German IT. 

SPI Digital Health: Ask the Analyst: Oceania EHR Market in 2023

Signify Research will publish its latest Oceania EHR Market Assessment later this month. The report, authored by Senior Analyst Arun Gill, will analyse major developments and trends in a market that generated over $500M in revenues in 2022, a figure that is projected to approach $800M in 2027 (see chart below). This is a moderately faster growth rate than we had forecast in the 2021 iteration of the report. 

EMR/EHR Market Revenues: Oceania 

“By global standards, Oceania is a small yet mature EHR market,” says Gill. “Administrative and operational EHR solution implementations are advanced, and a transition to clinical systems and data integration and information sharing now drives growth. 

“While Australia is the epicentre of activity, it is in the much smaller market of New Zealand that some of the biggest impacts are happening – not least a four-year, NZ$385M scheme to build new healthcare data systems and digital infrastructure,” he adds. 

The Signify View 

Gill points out that the move towards state- and region-wide contracts, along with some key acquisitions, are shaping the Oceania EHR market in 2023.  

“Only this month Altera started implementing its dbMotion Health Information Exchange (HIE) solution across Victoria, part of a wider five-year digital health programme being undertaken by the Australian state,” he explains. 

Under the HIE rollout, dbMotion will initially offer a complete view of patient public pathology reports. There will be an option to expand it to enable other clinical information to be shared at point of care, at a later date.  

Conspicuous Absence 

One of the most striking aspects of Signify Research’s Oceania EHR Market Assessment, Gill notes, is that Telstra – the leading EHR vendor in Australia by revenue – is absent from regional EMR contracts. With home field advantage, it enjoys a strong installed base only in national, individual hospital, ambulatory and long-term care EMR sectors of the market. A position it has solidified over the years via acquisition, such as of MedicalDirector, the market leader in primary care it acquired in 2021. 

But Epic, Oracle Cerner, Altera, Orion Health and InterSystems increasingly find Australian state-wide contracts to be fertile territory.  

Epic moved into this space in July 2020, securing the first state-wide contract issued by Australian Capital Territory (ACT) Health, worth A$151M. The contract is for Epic’s Digital Health Record solution (a suite of products including the Epic Beaker lab information system, Epic Radiant radiology information system, and its Patient Administration System (PAS)). The ACT government recently provided a further A$50M top-up funding to the project, with go-live completed at 45 ACT sites last November.  

Also in November 2022, Epic beat Oracle Cerner to the southern hemisphere’s largest-ever EHR contract covering 220 hospitals and eight million patients in New South Wales (NSW). Under the triple-digit million-dollar deal, Epic will unify core clinical and laboratory information systems (LISs) in a single digital patient record. In doing so, it will replace nine EMRs (Cerner and Orion Health), six PASs (Cerner and Dedalus (legacy DXC)) and five pathology LISs (Citadel and Integrated Software Solutions). 

Competitive Landscape 

“Epic’s dominance is almost a sideshow to the fight for market share taking place below,” Gill says. 

“Oracle Cerner will be smarting from losing out to Epic on the big NSW deal, and to Altera on the Victoria HIE contract, and also the fact it has ceded overall Australian market leadership to Telstra.  

“It will be banking on the benefits of Oracle’s USD$28B acquisition of Cerner in 2022 kicking in soon down under.” 

The vendor continues to make heavy weather of an A$412M ieMR implementation in Queensland, awarded in 2011 but paused in 2019 with a 42% funding shortfall. It was not until June 2022 that the Queensland government injected a further A$300M to re-start and roll the project out over the next five years.  

Gill points out that Altera is another vendor with an uncertain near- to medium-term outlook in Oceania.  

“Harris Computer Corporation’s $700M acquisition of Allscripts’ acute portfolio and parts of its ambulatory portfolio in 2022 (leading to the creation of Altera) has not soothed concerns over Altera’s future direction globally. 

It is, however, making good headway on Australian state contracts. As well as its Victoria HIE launch this month, late last year the vendor completed rollout of dbMotion in emergency departments across Victoria’s Gippsland Health Alliance. Over the next two years, rollout of its Sunrise EMR and PAS solutions will also be initiated across South Australia’s large regional hospitals and local health networks but, like other state-wide contracts in Australia, this scheme has also been beset by delays and funding deficits since being awarded a long 12 years ago. The challenge now for Altera will be leveraging its position in Victoria and South Australia to grow its business across the country. The more recent success in Victoria indicates that dbMotion is suited to the Australian HIE market and is well positioned to win in future contracts. The fact it has been 12 years since the South Australia deal was awarded suggests similar contracts for Sunrise may be the bigger challenge.    

Continuing with the state-wide theme in Australia, InterSystems went live with the first phase implementation of an A$259M state-wide ‘Acacia’ EHR last August at Katherine Hospital in the Northern Territories. This was followed in January 2023 with a second phase implementation at Gove Hospital in the same state. Four further hospital rollouts are due in the state over the next few years. 

Gill says that, in terms of Telstra Health, it comes into its own in individual hospital, ambulatory and long-term care markets, is present in more than 100 public and private hospitals and acquired MedicalDirector for A$350M in August 2021. The latter deal is, he says, part of Telstra’s broader strategic goal of becoming the leading EHR vendor in Australia across all care settings, by building a cloud-based infrastructure that facilitates interoperability.  

Underwhelming Record 

Signify Research’s Oceania EHR Market Assessment 2023 also picks up on ongoing problems with Australia’s national patient EHR system project. My Health Record was launched 11 years ago but, despite being subject to $2B-worth of investment, less than three million of the 23 million people who opted-in to the service accessed it in 2020-21. In mid-2021 the Australian Digital Health Agency, keen to address complaints by both the public (who couldn’t easily access their information) and GPs (who were having difficulty uploading and finding vital details such as pathology results and diagnostic tests), appointed Deloitte to build a new health information API gateway to replace the existing Oracle gateway. EHRs used elsewhere in Australia must now meet various interoperability standards for data to be shared with the national EHR, but uptake of My Health Record remains weak. 

New Zealand 

Like Australia, the trend in New Zealand is towards regional deployments as well as integrated care and Gill states that the implementation of a three-phase national health information platform is a major market driver. Launched in 2016, paused and ‘rebranded’ as Hira in 2019, the system aims to establish a data and digital services ecosystem to enable access to a virtual EHR by 2026. In 2021 Hira received NZ$385M, the first of three tranches of funding expected to be complete by mid-2024. The 2022 state budget then allocated a further $320M, part of which will support the second Hira tranche. 

Confirming the regional theme, four New Zealand regions are implementing EHR solutions, in which US vendor InterSystems is playing a leading role. It completed a first phase go-live PAS implementation with private hospital group MercyAscot in 2021, and a planned second phase (clinical EMR) was implemented at the end of that year. In January 2022 it began implementing its TrakCare cloud PAS at Auckland District Health Board (DHB) – one of the country’s 20 DHBs. Responsibility for providing or funding district healthcare services shifted from DHBs to the Te Whatu Ora – Health New Zealand agency in July last year.   

Epic, so dominant in Australia, was the chosen supplier for the Northern Region’s Regional Collaborative Community Care (RCCC) integrated care tender. However, integration issues stalled the project in January 2022. A new tender was issued and awarded to Aceso (Pinga platform) last December. 

Oracle Cerner, Epic’s traditional rival, also lacks a significant presence in New Zealand, but Oracle’s close partnership with PwC should help the healthcare business establish a local footprint in time. 

Positive Prognosis 

Given a total 8% CAGR to 2027, Oceania is a small yet opportune market, says Gill.  

“In Australia, unseating Epic will be a major challenge, given Oracle Cerner’s distractions in other markets and local player Telstra’s focus away from region-wide contracts,” he adds. 

“The playing field is more level in New Zealand, where a reorganisation of the health system and significant funding being allocated to digital health initiatives should keep vendors other than Epic on their toes and interested in opportunities,” Gill concludes. 

SPI Digital Health: Epic and the Art of Keeping things Simple

And so, the Epic juggernaut rolls on. This time, by securing a ‘next generation’ EHR contract at Northwell Health, a sizable health system in New York state. Behind the headline confirming Epic’s relentless march across US health systems is an arguably more pertinent narrative: how, when or indeed if other vendors will ever compete. It will take something special, or wholly unexpected, to tilt the power balance. 

The Signify View 

As much as the Northwell Health deal is another feather in Epic’s well-adorned cap, it is another blow for the slew of vendors clinging to its coat tails. 

None more so than Altera Digital Health (formerly part of Allscripts), whose legacy system Epic will replace on the Northwell Health deal. The contract, whose value is undisclosed, will see Epic create a single patient record across ambulatory, emergency, inpatient and post-acute care in 21 hospitals and roughly 900 outpatient facilities across New York state in a phased rollout. Norwell expects the first go-live in 2025.  

Losing out to Epic (and there is no great surprise in that given recent trends) nonetheless represents a setback for Altera in the US. At least it is not alone in this: aside from Epic, only MEDITECH is growing its share in the acute hospital market. Given the yawning gulf between them and Epic, the chasing pack might do well to focus on MEDITECH’s methods.  

Box of Tricks 

The acute/health system hospital market in the US, for both Integrated Delivery Networks (IDNs) and standalone hospitals, is a tough place for most vendors right now given Epic’s continued dominance.  In 2021, Epic gained 72 hospitals and 12,000 beds, a trend that has continued in 2022. Success for other vendors is a rare commodity: Oracle Cerner lost hospitals and thousands of beds in 2021 and 2022, as did Altera and CPSI. Medhost has managed to just about keep its head above water.  

MEDITECH is the only vendor bucking the trend, and is the only vendor offering Epic ‘serious’ competition at present. 

Could peering into MEDITECH’s box of tricks offer hope for other vendors? Possibly. Only four years ago, MEDITECH was also treading water, its revenues flatlining. Around the same time it launched its Expanse EHR solution. That proved well received by its customers, many of whom migrated to the new solution. Expanse has subsequently established an excellent reputation in the market, and steadily gaining market share.  

Unlike Epic, MEDITECH’s sweet spot is smaller health systems and individual hospital. Partnerships are key too: great examples being those with Innovaccer for value-based care (VBC) which we explore in this Insight; and with Google to improve search capabilities within its EHR. Having a strong product and partnerships that import innovation go a long way.  

Altera’s Challenge  

MEDITECH’s relatively simple model and sharp product focus contrasts starkly to that of Allscripts. The latter has two EHR products: Sunrise (for large hospital IDNs) and Paragon (for independent community hospitals), with a roughly 50:50 split in terms of business across the two.  

Allscripts acquired Paragon (as well as two revenue cycle management solutions (Star and HealthQuest), a lab information system and a content management system) in 2017 from McKesson. Allscripts (which then became Altera) then had to devote time (and money) giving Paragon some much-needed TLC. Furthermore, Paragon’s focus on independent hospitals is a challenge – as IDNs snap up smaller facilities, this is an ever-diminishing market, while Sunrise, which is aimed at IDNs and larger hospitals, has struggled to compete. 

Allscripts’ insatiable appetite for acquisitions from several years ago has come back to haunt it, and remains saddled with a disconnected portfolio, and solutions with very different DNA. Very different to Epic, whose principle remains to build its portfolios exclusively in-house rather than acquire. 

Even the mid-2022 sale of Allscripts’ inpatient business to Harris (and subsequent rebranding to Altera Digital Health) has failed materially to address legacy problems with a fragmented portfolio. On paper, Altera has some great solutions. Its TouchWorks ambulatory EHR for larger practices is a case in point, and Sunrise has both inpatient and primary/ambulatory care functionality. Alongside its value-based care offerings built around dbMotion it ticks the boxes in terms of the general building blocks that IDNs are looking for from a network-wide EHR vendor.  But the fragmented portfolio continues to hamper the vendor, especially when bidding for larger IDN contracts. 

There is another strategic complication for Altera. Its owner, Harris Computer Corporation, does not integrate at a business or strategic level the many (good) vendors it acquires. Some of these companies compete with each other, and Harris has an inpatient EHR solution directly up against Altera. Harris owns iMDsoft that has lots of well respected, departmental IT solutions for ICU and anaesthesia, and owns many small, ambulatory EHR vendors, such as Amazing Charts. Harris’ stable may be large, its solutions prized and its global footprint wide, but it is a disparate and disconnected business. And that is a problem when competing with Epic. 

Side-Tracked Cerner 

For different reasons to Altera, Oracle Cerner’s strategic and product woes are well documented. Globally, it has many issues on its plate that suck up considerable money and brainpower. Rarely a week goes by without reference to its painful, long-delayed, much-blighted multi-billion dollar Millennium EHR contract for the US Veteran’s Association. We have also written (see the Insight here) about long-term doubts over the future of its i.s.h.med solution in Europe. And, like Altera, Oracle Cerner’s portfolio is also fragmented, having bought in much of the technology over the years. Unlike Altera, the big hope for Oracle Cerner is that it has Oracle’s financial heft to bring its solutions (Millennium being the obvious example) up to scratch. However, although there are signs that the benefits of the acquisition are kicking in in some areas, the gap with Epic continues to widen. 

Smart Branding  

In plotting a viable path forward, vendors will do well to consider that IDNs increasingly seek those with a strong VBC IT portfolio element. Epic, Oracle Cerner (HealtheIntent) and Allscripts (dbMotion) all score well on that front, but HealtheIntent and dbMotion are positioned as standalone ‘brand’ solutions divorced from the EHR offering. On the other hand, Epic’s VBC product is simply positioned as an extension of epicCare, making it far easier for customers to engage with. 

MEDITECH, which was quite late to the game in terms of VBC solutions, is again well positioned in this respect. Its tie-up with Innovaccer, a best-of-breed VBC vendor, is a prime example of the power of partnerships for MEDITECH. 

When Less is More 

In many respects, Epic’s rampant success is a salutary lesson to other vendors of the power of keeping things simple. Where others have chosen to acquire technology and expertise, Epic’s single-minded philosophy of developing in-house is clearly paying dividends, such that much of its growth is self-perpetuating. This is especially true as health systems gradually consolidate IT procurement through one vendor. That vendor is increasingly Epic. 

This is very attractive to hospitals and IDNs, and those that Signify Research talks to – many of whom have migrated out from the likes of Oracle Cerner – acknowledge that Epic is now the safest (and simplest) pair of hands in the market.