How electronic health record systems are becoming healthcare platforms
How electronic health record systems are becoming healthcare platforms
Two seemingly unrelated headlines caught my attention recently: one is the widely discussed Oracle acquisition of Cerner, and the other is an article in NPJ Digital Medicine describing key challenges and opportunities for leveraging the electronic health record (EHR) to enhance the Sentinel Initiative, the FDA’s medical product safety surveillance program. To me, these are both chapters of the larger story of how the EHRs are transforming from software for medical records into a platforms for healthcare.
Platforms are both technical products and business models
As a technical product, a platform can be thought of as a system of hardware and software on which different applications and processes can be deployed. Historically, platforms involved on-premises architecture that supported the myriad of enterprise applications needed for a business. Much of this has since migrated to the cloud as platform-as-a-service (PaaS) solutions. In healthcare, large cloud players such as Microsoft Azure, Amazon AWS, and now increasingly Google Cloud offer PaaS products in addition to their infrastructure services that allow healthcare customers to deploy applications and analytics on its technology stack. Oracle has been a PaaS leader in many industries, but not healthcare.
The broader way of thinking about platforms is as a type of business model. Platform businesses enable exchanges between different entities by facilitating connections and transactions. Value creation therefore does not rely on a linear supply chain (build, ship, and sell a product to the customer), but from the cumulative connections and interactions that occur on the platform. Revenue is generated per interaction rather than per product unit, which is a powerful driver for economics of scale. Successful platform businesses can create network effects, meaning each additional entity joining the platform creates more value for the rest of the platform. For example, each additional driver and passenger who joins the Uber platform increases the total number of available drivers and customers, which then increases the chance of a value generating match.
EHR systems are beginning to look like platforms
The EHR is traditionally thought of as a piece of software for documenting, organizing, and accessing patient health records. The interaction is mainly limited between the user (clinician) and the EHR software. However, the scope of transactions that EHRs support have rapidly expanded to other mission critical services, such as revenue cycle management, clinical research, regulatory reporting, clinical communication, and patient engagement. These expanded services also come with an exponential increase in both the volume and diversity of interactions occurring through the EHR. Clinicians are no longer the only users of EHRs; patients, researchers, government regulatory agencies, non clinical healthcare staff, and medical device and digital health vendors are all now part of a growing list.
However, EHRs are not platforms yet. EHR companies still typically follow a linear SaaS business model, deriving most of their revenue from enterprise contracts with healthcare provide customers. While there are indeed a large number of interactions with the EHR system by different types of entities, these interactions typically occur directly with the EHR system, rather than between the entities themselves. Plenty of healthcare software vendors try to “integrate with the EHR” to reach users, but the EHR is often seen as a barrier to get through, rather than a facilitator for the interaction, which is what a true platform is supposed to offer. EHR systems are now starting to integrate different services and applications, such as clinical care, patient engagement, and revenue cycle in a “platform-like” manner; that is, they provide the technical back-end for these applications to interact with each other, but they ultimately still occur within the walled gardens of individual enterprise customers. I am interested in seeing what comes out of the Epic Research Network and the Cosmos program, which is working towards aggregating patient data from different health system customers to support research and discovery, which can potentially facilitate value generating interactions between health systems, vendors, and researchers.
Nevertheless, I believe EHRs are powerfully positioned to become platform businesses because:
A high percentage of mission critical processes in healthcare delivery involve the EHR, making it an incredibly sticky product.
EHRs accumulate rich data with each additional interaction occurring on its system.
“EHR integration” is a favorite word among healthcare technology vendors. What this means is if the EHR, rather than being a barrier, becomes a facilitator for this integration (and not just with the healthcare provider, but also between vendors), it could unlock a lot of value.
What does this have to with Oracle’s Cerner acquisition and the FDA Sentinel Initiative?
My view is that they are examples of growing supply and demand for EHRs to become platforms.
I can only speculate, but one version of the strategy behind Oracle’s acquisition of Cerner may be to create a true healthcare technology platform that facilitates interactions between entities within the healthcare ecosystem, including patients, providers, healthcare provider organizations, payers, third party software vendors, and government organizations. Oracle has the cloud, middleware, and analytics stack — all building blocks of a platform solution — and Cerner has the data and reach into healthcare services to cultivate a customer base and ecosystem.
On a parallel note, this article lays out a set of barriers to scaling the FDA Sentinel Initiative for medical product surveillance. Currently, there does not exist the infrastructure and analytics stack needed to leverage data from multiple EHR systems, payers, and medical devices fragmented across the industry in order support a surveillance program at the necessary scale. A healthcare platform that weaves together these entities can make it happen.
There are elements of healthcare that will present barriers to allowing platform businesses to grow in the same way as they have in other industries. However, I am excited to see the growth of both supply and demand, which makes me optimistic that the secular trend is there.