Traditionally, startups in healthcare have had challenges with distribution. This is not any different from companies in other industries, but innovation is not fully “permissionless” because of regulation, the many stakeholders involved (i.e. government, payers, hospitals/clinics, physicians, caregivers, and patients) with competing incentives, and the power of incumbents that continue to consolidate the market (i.e. pharma, PBMs, and EHRs).

The tide, however, might be changing. Over the last few years, certain companies have opened up platforms to encourage app development in the EHR space – from Epic’s App Orchard to Cerner’s Code and Allscripts’ Development Program. It’s still early: there are just over 200 apps on these three platforms combined. But if “data is oil”, then what’s exciting is that there is an opportunity to pull health/medical information that has been siloed in these systems of record into a “new engine” (i.e. a new smart enterprise or personalized consumer application). And with these EHR app stores, there is now a new distribution channel for healthcare startups and a way for customers to discover new apps.

If you are building a healthcare app on top of these EHRs, then just like any other company that relies on incumbent platforms, it is important to recognize the associated risks and answer the following questions:

• How do you control your destiny? This is particularly important since platforms control your distribution and monetization.
• Your integration into the platform is a great initial wedge. But how do you become more independent over time and what does that look like? Can your application be its own native product (i.e. can you use your app without the platform?) and/or become a new system of record?
• The EHR market is quite fragmented which diversifies you and takes away dependencies, but market share is split evenly across these three major players. How do you develop on each platform when they are all different? In addition, it is not uncommon for the implementation of a specific type of EHR to vary from one hospital/clinic to another, but also vary within one organization between different departments/specializations. Thus, it is important to have a strategy to deal with the customization that occurs with every EHR.

We’re excited to see what the opening of EHR systems offers to healthcare innovators. If you are building an application on top of these and have a clear strategy on how to tackle dependency, we’d love to talk to you!