Mis Five Forces Analysis

Topics: Electronic health record, Health care, Medicine Pages: 6 (1693 words) Published: December 1, 2012
A Five Forces Analysis of Allscripts,
An Electronic Health Records (EHR) technology company

Robert A. Brinker
GBA 530 – Management Information Systems
Professor Billie Whitfield
February 6, 2012

The purpose of this paper is to identify competitive forces at work based on Michael Porter’s Five Competitive Forces from his Competitive Analysis Model (McNurlin, 2009) and provide recommendations to Allscripts, an electronic health records (EHR) technology company, as to business technology related improvements. Reviewing the United States healthcare industry would be a massive undertaking, so I will narrow my analysis specifically to an industry that has great momentum, the Health Information Technology (HIT) industry. The healthcare industry was said to be in a makeover year in 2010. (PwC, 2010) “The U.S. health care sector includes more than 780,000 hospitals, doctor offices, emergency care units, nursing homes, and social services providers with combined annual revenue of more than $2 trillion”. (Hoovers, 2011) Many of these healthcare sector participants are very fragmented and information shared between them is either insufficient or non-existent. Most experts agree that the current spending on healthcare is unsustainable now representing 17.3 percent of the nation’s gross domestic product. Many factors are driving the high cost healthcare, but one thing is certain in that the delivery of healthcare hasn’t changed much over the last century at the patient and physician level. The delivery of healthcare is an antiquated paper driven process and in much need of modernization. The demand for HIT has been fueled by new Healthcare Reform legislation and incentives known as the Health Information Technology for Economic and Clinical Health Act or HITECH, passed by President Obama in 2009 as part of the American Recovery and Reinvestment Act (ARRA). The intent of the HITECH Act is to promote the modernization of the healthcare system to improve the quality of patient care and decrease overall costs by bringing technology to the practice of medicine. “More than $88.6 billion was spent by healthcare providers in 2010 on developing and implementing electronic health records (EHR), health Information exchanges (HIE), and other HIT initiatives”. (PwC, 2010) The HIT industry has incredible momentum and such high demand that HIT companies are entering the marketplace at an significant rate.

Although this industry has become very competitive and saturated over the last 2 years, there are several prominent companies leading the EHR industry. Among them are Allscripts, GE Centricity, and eClinicalWorks, which have been researched for this paper. Below are specific areas where key competitive forces are at work relative to Porter’s Five Forces Competitive Analysis Model.

Threat of new entrants
Suppliers of EHR systems and software to hospitals and physician practices were initially few in number earlier in the decade, but it has become a fiercely competitive industry. Privately owned small businesses now dominate the supply and demand for electronic medical records (EMRs) over the last several years. (Folino, 2009) As stated earlier government regulations have had a great impact on the threat of new entrants given the passing of new healthcare related regulations and proposed financial incentives issued to medical practices that implement EHR technology in their practices. Also, the increase in new entrants is certainly due to the low capital investments required to produce EHR products to the marketplace. In the past significant investments in large servers and data storage was required, which has been replaced in large part by internet based cloud technology. This trend is very likely to continue as cloud technology grows in acceptance and prices decrease.

Threat of substitutes
Overall, with demand for EHR systems growing it appears to be a very lucrative industry...

References: McNurlin, B. C., Sprague, R. H., Jr., & Bui, T. (2009). Information Systems Management in Practice (8th ed.). Upper Saddle River, NJ: Prentice Hall
Top health industry issues of 2011
View: Making over healthcare. (2010) Issue 14. PricewaterhouseCoopers (PwC) at http://www.pwc.com accessed on January 30, 2012
Healthcare Industry Description
Big Business Eyes EMR Industry. By Lauren Folino, Oct 6, 2009. Access at http://www.inc.com/news/articles/2009/10/emr.html on February 4, 2012
Introduction of an Electronic Medical Record System into Physician Practice
Offices: Why Is It so #%!&-ing Hard for Everybody?—Part III. Joseph P. Lyons, MA, CPA,* and Stephen Klasko, MD, MBA. Information Systems (2011)
Tapping the Unmet Potential of Health Information Technology
O 'Malley, Ann. The New England Journal of Medicine 364. Â12 (Mar 24, 2011): 1090-1091
Allscripts corporate website, accessed at http://www.allscripts.com on February 3, 2012
eClinicalWorks corporate website, accessed at http://www.eclinicalworks.com on February 3, 2012
GE Healthcare corporate website, accessed at http://www.gehealthcare.com on February 3, 2012
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