Can Misys conquer the medical record paper mountain?

(By Anthony Miller) Here’s the headline statistic. 80% of US physicians do not have EHR (electronic health records) – a ~$5bn opportunity. Actually, for small physician practices it’s more like 90%. QED, the recently completed merger of Misys’ healthcare business with US-listed software player Allscripts is now poised to deliver huge rewards. Easy-peasy.

But hang on a minute. There must be a reason why over 90% of small practices are still knee-deep in paper medical records. It’s certainly not because EHR products haven’t been available before. In fact, according to Allscripts, EHR systems have been around for twenty years and there are now some 350 vendors in the US alone. Here’s my theory. The reason why EHR penetration is so low in small practices is because, for the vast majority, the sheer time, effort and cost of converting paper-based medical records of probably thousands of patients going back years if not decades is simply not a practical or economic proposition.

I put this very point to Allscripts CEO Glen Tullman at this morning’s briefing. He noted that the US government provides financial assistance to physician practices to help make the transition. He mentioned grants of $3-5,000, which I have to say sounds like a drop in the ocean compared to the size of the task. Tullman also noted that hospitals in the US are now allowed to fund physicians too. But I just don’t see direct cost as the big issue. Any of us who have lived through the ‘computerisation’ of a manual system in a large corporation will know the pain involved in gathering the paper records, sorting them, transcribing them, correcting errors, resolving duplicates, and so on. Now imagine you are a 3-person medical practice with no IT department.

Look, I think Misys CEO Mike Lawrie has done an incredible job in getting the merger done and dusted (the funding was originally to come from Lehmans!) even to the extent that the businesses are already operationally integrated. I expected nothing less from one of the industry’s most seasoned executives. But I really worry about any business case that is predicated on the “if we only get a few percent of this under-penetrated market we will be rich” type of logic without really showing how they are going to address the underlying problem as to why the market is so under-penetrated in the first place.

This won’t just be a challenge for Misys. Sage has to face this too with its US healthcare products business. I just wish that our two largest UK software companies hadn’t become so enamoured with the “huge opportunity” in the US healthcare IT market, as they may find it is they that will end up needing some intensive care.