Tuesday Jan 8, 2013 by Ambar Bhattacharyya - Vice President, Bessemer Venture Partners
In our healthcare practice, we look to identify and invest in the biggest trends in the marketplace. So what is the largest healthcare trend today? If you ask healthcare CEOs and CFOs across different health systems, their #1 priority is to purchase and implement electronic medical record (EMRs) as soon as possible. Unanimously.
For those who follow the healthcare space regularly, the reasons are clear. The federal HITECH Act, passed as part of the American Recovery and Reinvestment Act (ARRA), signed into law in 2009, includes $17.2 billion in incentives for the adoption of EMR starting in 2011, and penalizes those that have not adopted an EMR by 2015. Through September 2012, the Center for Medicare and Medicaid Services (CMS) paid out about $4 billion in incentives to 82,000 medical professionals and more than 1,400 hospitals.
While $4 billion may seem like a large number, it pales in comparison to the amount that hospitals are spending on EMR systems. The deal sizes for EMRs are large; for instance, San Francisco’s top hospital, UCSF, is spending $160m over 10 years. At Bessemer, we identified this trend in EMRs very early through our roadmaps; our investment in Allscripts, one of the leading EMR companies, happened over a decade ago, and the company has gone on to become one of the winners in the space.
As we look today at the inpatient EMR space, it is hard to ignore one particular player – Epic Systems.
Epic is a family-owned EMR company based in Wisconsin that is the leader in the hospital-based EMR space; it has the #1 market share in larger hospitals, and 80% of hospital EMR selections now go to either Epic or its competitor Cerner. More and more, we see companies starting to ride this “Epic” Wave (and the wave of other leading EMR companies).
As hospital IT budgets transition from purchasing EMR systems to leveraging the data they are collecting, we envision a new ecosystem forming around the EMRs – an investment roadmap we broadly call EMR 2.0. These companies will be built to serve hospitals and physicians who need to support their implementations, proactively help clinicians use technology, and develop ways to generate a return on investment on their EMR investments through data analytics.
In particular, we have seen hospitals investing more in these EMR 2.0 products, namely:
Similar to the EMR space, we believe the EMR 2.0 space will yield multiple winners, and we hope to support many an entrepreneur along their path in doing so!
Ambar Bhattacharyya is a Vice President with Bessemer Venture Partners in Cambridge, MA. You can find this post, as well as additional content on his blog located here. You can also follow Ambar on Twitter (@AmbarBh) by clicking here.