This Insight is part of the Signify Premium Insights (SPI)-Digital Health service, which will launch on 9 January 2023. From that date, this and all SPI-Digital Health Insights will be available only by paid subscription. Click here for a free one month trial of this service.
In mid-October, US EHR vendor MEDITECH announced the launch of Expanse Population Insight, a new population health management (PHM) solution powered by Innovaccer.
The tie-up between MEDITECH, an established tier-1 EHR vendor and Innovaccer, which has a reputation as a PHM/value-based care (VBC) disruptor, is a potentially potent combination.
But as US hospital EHR buyers converge their procurement around large single-source vendors (like Epic) covering multiple different care settings, what does the future hold for Expanse Population Insight and, more broadly, the MEDITECH-Innovaccer partnership?
The Signify View
MEDITECH and Innovaccer both bring plenty to the partnership table. Since bringing the first iteration of its Expanse EHR solution to market in 2018, MEDITECH’s customer base has expanded and its annual revenues have grown.
The company has carved a solid competitive position for itself, moving away from the point solution model of similar-sized rivals. Unlike CPSI (which only offers an EHR solution for small hospitals) or NextGen and eClinical Works (which offer only an EHR for ambulatory primary care), MEDITECH’s reach is wider and deeper. It serves not only small, independent hospitals (which are its core business) but has also established a foothold among larger health systems and Integrated Delivery Networks (IDNs). Just last month, MEDITECH announced a large-scale Expanse deployment for HCA Healthcare, a large healthcare service provider that manages 182 hospitals and 2,300 care sites across the US and UK.
With a customer base of around 500 hospitals in the US, MEDITECH now sits behind only Epic, Cerner and Altera Health in the US hospital/health system EHR pecking order. While the company is highly unlikely to unseat its much larger rivals, notably only it and Epic are currently gaining appreciable market share in the US inpatient/health systems/IDNs market (see chart below).
Innovaccer has a similarly impressive backstory. Its annual revenues have jumped more than five-fold from 2017 to more than $100M in 2022. The company currently has around 70 health systems on its books, and is valued at $3B. Innovaccer has built strong relationships with hospital IT buyers, and is viewed by many as the preferred independent PHM/VBC platform solution.
As a data aggregation solution, Expanse Population Insight plays neatly into the integrated care/PHM evolution in the US. Data aggregation remains the biggest PHM revenue driver at present (see chart below) in the US.
The overall PHM US market is forecast to be worth $10.2B in 2026 ($5.3B in 2021).
The tie-up also gives Innovaccer a better route to market than it has had historically. Rather than having to reply on selling its solution directly to buyers, Innovaccer can now leverage MEDITECH’s installed base and marketing might via Expanse Population Insight. And in MEDITECH it has a partner which is solidly grounded in the US EHR market covering all main care settings. The relationship has the potential to be expanded outside of the US, into countries such as the UK, where MEDITECH has a sizeable installed base of customers and Innovaccer has ambitions.
On the face of it, this is an ideal match for both companies. Expanse Population Insight will not propel MEDITECH onto the top table of US EHR, but it will certainly give the current incumbents something to think about, in the short-term at least. There are, however, potential obstacles lurking in the shadows.
MEDITECH’s growth trajectory may be impressive, and it may still be gaining market share, but it is still a far smaller player than heavyweights like Epic and Cerner. Without the resources to develop its platform solutions in-house, MEDITECH’s approach has been to seek high calibre partnerships. Hence Innovaccer, and also its early-2022 link up with Google, with the intention of integrating the tech giant’s CareStudio platform into Expanse.
The Innovaccer partnership carries some risk. While MEDITECH’s core business leans a little more towards smaller, independent hospitals, Innovaccer’s PHM solution is far better suited to an IDN, where it can manage a whole population across multiple different care settings and where the reach into the community is much deeper. This risk might be mitigated by MEDITECH’s healthy roots in larger health systems, but in reality it is nowhere near as dominant as Epic in this.
The problem for MEDITECH and Innovaccer is that, as much as they have the solutions to sell to the large healthcare systems and IDNs – and in truth there is still a loyal fanbase of hospital IT buyers who prefer independent vendors like Innovaccer – there is a defined shift in procurement towards large, single-source EHR vendors, and in particular Epic. The big IDNs and hospital health systems are very much Epic and Oracle Cerner territory, and there is a real risk that in this environment MEDITECH will lose out in the medium-term.
The MEDITECH-Innovaccer tie-up also throws up some other intriguing relationship dynamics. For one, it appears to sound the death knell for MEDITECH’s PHM solution collaboration with Arcadia Healthcare Solutions, whose data aggregation platform had been supporting MEDITECH’s Web EHR and analytics solution since 2018. This is clearly good news for Innovaccer.
As is MEDITECH’s relationship with Google. The tech giant would have seen CareStudio as the first step towards forging a deeper relationship with MEDITECH. This deeper relationship could have offered other opportunities that utilise Google’s abilities to drive insights from data in VBC (e g via its Healthcare Data Engine (HDE) accelerators). The MEDITECH-Innovaccer deal appears to limit potential for future VBC product development between the companies in this area. That said Google and MEDITECH continue to develop their relationship in other areas. For example it recently announced that it was working with MEDITECH in terms of cloud services for Expanse.
Innovaccer faces relationship challenges of its own, however, again around the broader trend towards consolidation around a single EHR vendor. We understand that some of Innovaccer’s customers, who are fans of the Innovaccer platform, are also supporting the development of Epic’s Healthy Planet PHM platform in order to support a longer-term strategy of IT consolidation around Epic. The assumption is that, once Healthy Planet’s functionality matches that of the Innovaccer platform, some of Innovaccer’s customers will migrate over to Epic.
MEDITECH is taking a measured, partnership-based growth approach. In the short-term, these partnerships will bear fruit and enable the company to compete with its larger rivals, and the Innovaccer tie-up will give it a sharper edge in PHM. While momentum is with MEDITECH and Innovaccer right now, the complex and ever-changing nature of the EHR and Value-based Care IT market in the US means that both will need to continue to innovate to stave off Epic.