Propelled by government incentives, a desire to improve patient outcomes and the bottom line, sales of electronic medical records reached $17.9 billion in 2011, up 14.2 percent from the previous year, according to market research publisher Kalorama Information.

In its recent report, “EMR 2012: the Market for Electronic Medical Records,” Kalorama found the uptick in sales is being aided by increasing physician and hospital acceptance, robust competition and growth in EMR budgets.

[See also: Kalorama: EMR market at $15.7B for 2010, MU to further growth]

Although there is no one leader in the current EMR market, “Allscript and Epic have made considerable gains," noted the report. "However, due to the fragmented industry, there seems to be room for additional mergers and acquisitions and new players.”

Incentives have been a factor in the increased usage and growth of EMR systems, according to the report. As part of the American Recovery and Reinvestment Act (ARRA) passed in February 2009, the federal government set aside nearly $20 billion in incentives for hospitals and physician practices to adopt electronic medical records.

Healthcare organizations are also being motivated to implement EMRs out of a fear of looming government penalties.

“After 2015, it is no longer voluntary to get EMR and to demonstrate ‘meaningful use’ if you are a physician or hospital,” said Bruce Carlson, publisher of Kalorama Information.  “A penalty (will be) assessed if you continue to submit claims by paper. Medicare will actually reduce payments in reimbursement to physicians for paper submission. They plan so far to reduce Medicare reimbursements for physicians who are ‘non-meaningful users of EMR’ (a long way of saying paper record users) 1 percent for 2015, 2 percent for 2016, 3 percent for 2017 and future penalties to be determined. This won’t happen until 2015 but since that is two years from now, we see it impacting software sales a little this year and very much next year.”

[See also: Kalorama: No clear EMR leader]

Kalorama expects the pending penalties to continue to drive up sales and predicts the EMR market growth rate to be 20 percent in 2012-2013. 

Follow HFN Editor Rene Letourneau on Twitter @ReneLetourneau.