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The lessons our EMR industry can learn from past failures in the CRM industry

Posted Mar 03 2010 9:24am

A few days ago I received a great question about Customer Relationship Management (CRM) and Sales Force Automation (SFA) from a reader via e-mail:

In a recent post you made reference to the similarities with CRM and SFA .  I was and have been following that topic, like you, for the last decade.  My question for you is, do the primary drivers for this come from the same places with different names, or from different places.  For example, the incentives to not share information, for individuals using SFA or CRM may seem to (or actually) outweigh the users benefit.   What’s your high level take on CRM and SFA similarities and differences with EMR in terms of strategic adoption drivers?

One of my problems with CRM, SFA, and EMRs in general (with respect to functionality, usability, and adoption) is that the people who perform the data entry and the people who actually benefit from the data are not the same. This means that the incentives are not aligned properly and when incentives aren’t aligned in anything (including IT) then failure is likely to ensue.

Although as a tech strategist I’ve done a good deal of work in the CRM and SFA industries I thought I would reach out to a CRM industry veteran to talk about the lessons our EMR industry can learn from past failures in the CRM industry. A friend of mine, David Lee, is the Principal at eRECORDS, Inc . David has provided successful healthcare, CRM and financial product consultancy for the past two decades and most recently, guiding healthcare organizations to “meaningful use”. David used to run a CRM company that he recently sold and using that experience I asked him to share his views.

Here’s what David had to say, in his own words

What system produces the following statements?

  • “It’s way too expensive to buy and the implementation is full of hidden costs.”
  • “It is way too complicated. So much that most of our users stop using within the first year of roll-out.”
  • “I am no big hurry to put it in. I still have years to think about it.”

As you probably have guessed, these are common views when looking at Electronic Medical Records (EMR) systems. Not too long ago, these were the exact same sentiments applied to Customer Relationship Management (CRM) systems.
Many CRM vendors have claimed that these views were more perception than reality and that high profile CRM failures should not equate to industry as a whole. As a person who has created, bought, sold, implemented and supported dozens of CRM systems, these and other similar views were more than what just few high profile failures indicated. To learn from CRM industry, one must look at the CRM systems of the past.

What were some past realities of CRM?

  • According to most analyst groups, including Gartner and Forrester, CRM failure rates were between 55% to 70% just a few short years ago.
  • The cost of a CRM purchase and implementation were hundreds of thousands of dollars and in many cases, millions of dollars for large organizations.
  • Management saw benefits of tracking information electronically but users of CRM (sales and service professionals) were frustrated with the complexities and data entry. This is the misalignment of incentives that Shahid referred to above.

Although the CRM industry still faces many challenges, it has made great strides by learning from its own failures and adjusting the offerings and the way the “business is done”. CRM buyers today have choices for exactly what they need depending on the organization size and need. CRM vendors are much better at assisting their customers implement more quickly without the complexities that can kill usage. For many small to mid organizations, a CRM can be purchased and implemented within 6 months and for less than six figures. Combined these successes with the core belief that a CRM is a must have for organizations to compete; it’s no wonder the CRM spending is continuing to grow. According to Forrester, global CRM spending for 2010 is estimated to be $11B.

Lessons from the CRM industry can and should be applied to EMR industry because they share similarities in history as well as failures.

Historically, CRM and EMR got their conceptual roots in the 60s as the computer and software industry began. Both can thank the academic world for giving birth to initial systems (coded in software language). Thanks to the University of Vermont’s PROMISE project, the first ever EMR (called problem-oriented medical record, or POMR) was implemented at Medical Center Hospital of Vermont in 1970. As with CRMs, EMR systems were refined and improved by academia and research groups during the 70s and 80s with adoptions by healthcare organizations starting in the 90s.

As more and more organizations adopted CRMs and EMRs, both industries continued their similarities, though at different speeds. More specifically, CRM industry began to move more rapidly through its industry life cycle than EMR systems. That gives the EMR industry the advantage of learning from the CRM industry.

These trends in the current EMR industry mimic (very closely) the CRM industry’s issues:

  • Failure rates - According to the Department of Health and Human Services (HHS) findings in 2009, 30% to 50% of EMRs fail. Many analyst groups peg this failure as high as 75%.
  • Cost - Cost of an EMR purchase and implementation is hundreds of thousands of dollars and in many cases, millions of dollars for large organizations. It is estimated that an average EMR costs $60,000 per physician.
  • Complexity - EMRs are too complicated to use and too much “typing” for physicians at point of service.
  • Adoption rate – EMR adoption, by some estimate, is between 14% and 25%. As the CRM adoption rate has increased in recent years, EMR adoption rate will also improve. Some estimate that the EMR adoption of 50% or greater is realistic within 10 years.
  • Continued spending - Like CRM, EMR, with all the challenges and failures, is still viewed as a must have. This is supported by the continued growth in spending. Estimates are in the billions of dollars globally with continued growth in the foreseeable future.

What lessons can we learn from CRM failures and apply them to the EMR industry?

  • Patience is a virtue. Any EMR implementation requires patience. Accept that EMR implementation and eventual adoption by users is a painful and lengthy process.
  • Don’t buy a Ferrari when you only need a Honda. Do not buy an EMR package that is an over-kill for what an organization need. Complication contributes to failure of an EMR more than anything else.
  • Take small bite size chunks. Do not try to implement everything all at once. Plan and implement EMR functions and features in manageable sizes and over time.
  • Keep it simple. Just because the EMR package allows customizations of everything does not mean you have to customize everything. KISS principle definitely applies.
  • Focus on the ultimate goal. Continue to focus on the goal of providing better care while improving efficiency. That’s why you are implementing and using an EMR.

Very few would argue against the positive effects of a properly implemented EMR in the long term. Many view EMR, including myself, as a must have evolutionary step in healthcare. Of course the  U.S. government has joined this view and is investing billions of dollars in the form of incentives for the adoption and meaningful use of certified EMR packages. This, in my opinion, will evolve into the U.S. government mandating the use of an EMR in coming years by penalizing healthcare providers for not having an EMR in place. Insurance carriers are not too far behind in using the EMR use as a requirement for getting full reimbursements.

EMR adoption and use is here to stay and as a healthcare provider, it’s a good time to start your research. As the CRM industry has shown in recent years, our EMR industry will have more successes than failures in the long run but plenty of fits and starts in the short term. With the lessons learned from the CRM industry, and armed with the expert guidance, you can adopt an EMR that can probably meet your financial and healthcare objectives.

As a parting gift from Shahid, here’s a document that you might be interested in if you want to learn more about the CRM industry’s perceived (or real) failures:

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