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By Mel Duvall
One of the unintended consequences of President Obama's drive to adopt electronic health records throughout the healthcare sector, could be a wave of mergers and acquisitions.
At least that is one of the predicted outcomes from a "war game" which simulated the likely impacts of the administration's plans to spend billions on technology to improve healthcare and cut costs.
The war game, which was organized by Cambridge, Mass.-based Fuld & Company, brought together four top business schools in April for event called "The Battle for Healthcare Information." In the simulation, teams from the Wharton School of Business, Columbia University School of Business, MIT's Sloan School of Management, and Northwestern's Kellogg School of Management, analyzed the administration's plans to inject $19 billion into the deployment of electronic health records (EHRs) in hospitals and physicians' practices.
The participants each assumed the identity of four major healthcare icons and tested various strategies to determine who would likely profit from the adoption of EHRs. A key finding: prominent companies in the information technology and healthcare delivery industries—such as Microsoft, McKesson, Kaiser-Permanente, and Allscripts—would likely move to create alliances and buy out or merge with rivals.
"The Obama administration's injecting $19 billion to kick-start this nascent electronic medical records industry just gets the players moving," said Leonard Fuld, president and founder of Fuld & Company. "It is no guarantee you will see universal adoption of electronic records in healthcare anytime soon."
Among the predictions derived from the war game:
- Entrenched interests will continue to resist EHRs for some time to come. Some hospitals and doctors make additional revenues from current inefficiencies and will likely resist attempts to implement EHRs.
- A shortage of technical skills will hamper implementation of EHRs, no matter how much money is thrown at the challenge.
- The adoption of EHRs will act as a catalyst to force small medical practices to band together or merge in the next few years.
The participants in the war game came to the conclusion that larger IT companies, such as IBM, Microsoft, and Oracle, could very well begin hunting for pure-play healthcare IT companies, such as Allscripts, Epic Systems, and Cerner, to grab chunks of the Federal stimulus dollars.
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