Hospital EHR spending projected to reach $9.9B by 2024

The electronic health record industry has benefited from steady growth over the last few years, but a new report warns the financial squeeze from COVID-19 may lead to setbacks for many EHR vendors. 

Even so, the business research company Freedonia Group points out in its report that the crisis has also demonstrated the importance of both EHRs and interoperability between systems.

Report authors also predict that EHR vendors will benefit from regulatory requirements around EHR implementation and projected growth in hospital spending.

“US expenditures on electronic health records (EHRs) are forecast to total $19.9 billion in 2024,” according to the report, which predicts hospital EHR spending will reach $9.9 billion. 

Nursing and residential care facilities represent the fastest-growing segment of EHR users, with spending projected to increase 19% every year until 2024.


EHR expenditures in the United States grew an annual average of 5.4% from 2015 to 2019, totaling $14.5 billion in 2019.

Because of the need for scalability, report authors note, many healthcare providers purchase EHR as a software-as-a-service. Furthermore, they say, clinical workflows and regulatory requirements make it unlikely that providers will stop EHR services altogether, though they may decide to switch vendors.

“The stability in medical service expenditures, supported by the fact that healthcare is a necessity and a significant share of medical spending is paid by the government (e.g., Medicare and Medicaid), provides stability to the EHR market,” the report notes.

Although hospitals represent the largest segment of EHR expenditures, ambulatory care services (such as dentists and other outpatient offices) and nursing homes also spend hundreds of millions of dollars a year on EHR services.

The report notes that vendors that offer providers easy-to-use software and customizable workflows will gain advantages in the market. 

“Physician burnout due to the time required in EHR workflows continues to register as a major issue for doctor practices,” according to Freedonia Group researchers.

The COVID-19 crisis has clarified the value of EHR interoperability, the report notes. 

“For example, instantly viewing the health history of incoming COVID-19 patients to identify those with comorbidities (e.g., heart disease or respiratory issues) helps hospitals deploy their limited resources more efficiently,” it reads. 

“In addition, some vendors, such as Cerner and Meditech, have deployed questionnaires via their EHR systems that doctors and hospitals can use to screen patients for COVID-19.”

Still, it warns, healthcare facilities – particularly hospitals – may be strained for cash in the short term because of canceled procedures and staffing changes. In turn, this could lead to a delay in the implementation of IT projects.


Despite federal regulatory support, EHR rollouts have faced logistical, technical and human-resources hurdles over the last decade. 

A 2015 report from the Robert Wood Johnson Foundation found that, while the HITECH Act passed by Congress in 2009 “helped to initiate significant progress” on health IT adoption and use, “in general, it fell short of achieving its overarching goals to establish a highly effective and efficient healthcare system enabled by the advanced use of HIT.”

EHR vendors have worked to adjust their systems accordingly. In 2019, leading EHR vendor Epic CEO Jody Faulkner said all the company’s programmers routinely traveled to customer sites “to see, how can our software do better? How do we make it better? How do we get feedback from them?”

Companies have also shifted their strategies in recognition of the challenges posed by COVID-19. This month, Cerner took the Tennessee-based 25-bed acute care Macon County Hospital live remotely to limit potential coronavirus exposure.


“EHRs have been used for decades,” noted researchers in the Freedonia report. “The US Veteran’s Administration (VA), Department of Defense (DoD), and the Indian Health Service were among the key pioneers of EHRs, with the VA’s first EHR system developed in 1977.”

In the future, they said, “vendors will benefit from ongoing regulatory requirements and continued growth in medical service spending, which will allow healthcare providers to install new EHR systems or replace older systems, and purchase ongoing hosting, maintenance, and support services.” 


Kat Jercich is senior editor of Healthcare IT News.
Twitter: @kjercich
Healthcare IT News is a HIMSS Media publication.

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