Allscripts has nabbed prescription startup ZappRx

Advertisement
Allscripts has nabbed prescription startup ZappRx
  • This is an excerpt from a story delivered exclusively to Business Insider Intelligence Digital Health Pro subscribers.
  • To receive the full story plus other insights each morning, click here.
Advertisement

In an effort to spiff up its line of offerings, electronic health system (EHR) vendor Allscripts snapped up Boston-based specialty drug prescription startup ZappRx, according to MedCity News.

Allscripts' Total Revenue Was On An Upswing But Took a Shark Decline in Q1 2019

While the cost of the deal is unclear, we know ZappRx's price tag was smaller than the $42 million the startup previously raised in venture capital. Now, Allscripts will integrate ZappRx's cloud-based platform - which expedites prescription-related administrative tasks for providers - into its feature that grants providers the ability to prescribe medications digitally.

Here's what it means: Extending its scope with new products and dipping into new revenue streams is a good call for Allscripts considering its recent run of speedbumps.

  • A horde of Allscripts' clients jumped ship in favor of powerful competitors. Allscripts shouldered its way to earn the third spot on the US' list of top EHR vendors: In 2017, Allscripts ranked third with 11% of the market share, ousting Meditech, which ranked third in 2014, per Open Market Institute. But EHR vendor behemoths Epic and Cerner have been gobbling up larger portions of the market, and Allscripts waved goodbye to at least 28 of its hospital clients in 2018 - most of whom ditched it for Epic.
  • And Allscripts' revenue took a hit earlier this year.Allscripts brought in $432 million in revenue in Q1 2019, a sharp 16% year-over-year decline from $514 million in 2018, according to earnings reports. Strengthening its portfolio with ZappRx should allow Allscripts to up the value of its platform to customers and tap into revenue accruing from the upstart's pharmacy data. This the latest instance that suggests that Allscripts is turning to acquisition as a growth strategy: It bought unicorn EHR vendor Practice Fusion for $100 million in January 2018, per CNBC.

The bigger picture: We expect EHR vendors to bolster their product offerings through partnerships and acquisitions to better meet hospital clients' needs.

Advertisement

  • EHR players will likely turn to outside parties to meet provider demand for value-based care services. Doctors are facing more pressure to adapt to a new payment design: Reimbursement that hinges on the value of their care could account for the majority of healthcare payments within five years. In response, Epic and Cerner both announced partnerships to cut costs and enhance workflows for their clients. As providers grow to expect more out of their EHR systems, we think we'll see an upsurge of this sort of activity in the coming years.
  • And EHR vendors will also likely invest in new resources and partnerships to develop solutions that ease physicians' clerical burdens. Providers are slammed with a swelling number of administrative tasks: 70% of physicians said they spent at least 10 hours weekly on administrative tasks in 2018, up from 57% who said the same in 2017, per the AMA. EHRs are notorious for adding to that burden, and we could see growing physician dissatisfaction push EHR vendors to scoop up startups that provide tech that could relieve common physician pain points, like ZappRx seeks to do with its platform for streamlining the prescription process. And as the digital market continues to grow and become crowded with players, startups trying to stay afloat might turn to acquisitions, which could offer EHR vendors an opportunity to take advantage of new tech.

Interested in getting the full story? Here are two ways to get access:

1. Sign up for Digital Health Pro, Business Insider Intelligence's expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of healthcare, delivered to your inbox 6x a week. >> Get Started

2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to Digital Health Pro, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

Join Digital Health Pro

{{}}