Why the health IT industry can accommodate hundreds of EHR solutions without major differentiation

A few days ago Harvard Business Review’s Blog Network published “You Can Win Without Differentiation” and it reminded me of the many lectures I’ve given over the past few years on why the health IT industry tolerates hundreds of EHR and EMR companies that don’t really differ much from each other.

A key point made in the article was:

The trick is that when there is uncertainty about the quality of a product or service, firms do not have to rely on differentiation in order to obtain a competitive advantage. Whether you’re a law firm or a hairdresser, people will find it difficult – at least beforehand – to assess how good you really are. But customers, nonetheless, have to pick one.

Even though we have many ranking firms, analyst reports, and different evaluation criteria about EHRs and other health IT solutions, there is still quite a bit of uncertainty about the quality of those solutions. There are many reasons why our health IT industry accommodates hundreds of EHRs solutions, but the author summarizes one reason quite nicely:

Research in Organizational Sociology shows that when there is such uncertainty, buyers rely on other signals to decide whether to purchase, such as the seller’s status, its social network ties, and prior relationships.