As Aristotle once said, one swallow does not a summer make, so the closing of electronic health record company Imagine MD doesn’t mean consolidation for the EHR industry is here or even imminent, but it’s a useful reminder that it’s coming.
The New York health IT business’ target market was small medical practices that paid a monthly subscription. It provided a cloud-based EHR system with services such as e-prescribing and helping clients meet Meaningful Use requirements. As of January this year backers had invested $25 million in the company, $10 million of that in the past 12 months. It had raised $25 million in the 12 months to January 25. George Blumenthal, the CEO and chairman of the business founded the company in 2006 as eHealth Made Easy. He had previously founded and led Cellular Communications, known as Cellular One in the US.
A message on its website read:
We are terminating all of our services as we are in the process of exiting the business.Advertisement
Following termination of Services we will return to you, or, upon your written instruction, transfer to another party, all patient records, including personal information you have provided to us or we have created and maintained on your behalf. Such information will be provided in an encrypted format. You will be contacted in the near future regarding this transfer of information.
The HITECH Act with its millions in incentives to get smaller physician practices and hospitals to change over to electronic medical records attracted loads of companies to enter the field. Tom Olenzak of Drexel Partners and a consultant with Independence Blue Cross, observed that the market can’t sustain the hundreds of registered electronic health record companies out there.
“It’s a finite market. Realistically, they will consolidate by being bought out or closing their doors. What we don’t know is will small companies be able to sell their patient lists to someone else?” And because there are so many electronic health record companies, it’s tough to imagine that a startup would fetch exciting numbers.
Raj Prabhu, co-founder and managing partner of Mercom Capital, which tracks health IT companies think it’s bit early to start using the c word: “We monitor news like this and we haven’t seen many EMR/EHR companies being closed in the last few years. That said, I would not consider one company closing as a sign of consolidation. This sector is still very young for consolidation and there might have been other problems with the company’s business strategy and the product itself.”
As so many have noted before, it’s not necessarily about the quality of a company’s product. It’s also about marketing, leveraging relationships and many other variables. As the competition in the health IT market continues to build, the companies that can make shrewd partnerships are the ones that are likely to endure.