Despite some slower-than-expected growth due to confusion over vendor qualifications and federal meaningful use guidelines, the EMR market grew in 2010 and should see its best years ahead, according to Kalorama Information.

The healthcare market research publisher's latest report, "EMR 2011: The Market for Electronic Medical Record Systems," values the market for EMR at $15.7 billion in 2010.

According to the report, the growth rate of 10 percent in 2009 and 13.6 percent in 2010 was a little slower than the 15 percent growth that Kalorama had predicted for each year, possibly due to hesitation by physicians confused about meaningful use guidelines, researchers suggest. But despite this, they pointed out, considerable growth did occur.

[See also: Ambulatory EMR sales shoot up again]

Survey results show physician use of an EMR at near 50 percent, and Kalorama believes adoption and upgrading activities will be brisk in coming years. As new systems are sold, companies will still earn revenues from existing clients in servicing and consulting, researchers said. Kalorama expects market growth of more than 18 percent for the next two years.

"We think that while progress was made in physician adoption and in vendor sales, there is still a lot more potential," said Bruce Carlson, Kalorama's publisher. "There are still a considerable number of physicians who need to be fully functional and hospitals that have to improve their stage ranking."

The report includes revenues for EMR and CPOE systems as well as directly related services, such as installation, training and consulting, which are often the key profit areas for companies. Kalorama's forecast assumes that EMR use will continue to increase as hospital EMR adoption encourages physician adoption, current EMR Stage 3 hospitals purchase more advanced systems and current EMR owners upgrade.

Kalorama also believes that the threat of penalties in 2015 – reduced payments from the Centers for Medicare and Medicaid Services for those that don't engage in the meaningful use of electronic records – will force doctors and hospitals to make upgrades.

[See also: Survey: Docs show little concern for meaningful use penalties]

"The stick is stronger than the carrot when it comes to the ARRA incentive-penalty equation," said Carlson. "We continue to believe that and we think it's the industry's consensus as well. While the policy already picked up those oriented towards technology, the penalties will force conversion and upgrading in the future. And those decisions will happen in the next two years, before the penalties kick in."

Click here for the full report.