Market Overview

Medical information systems (including electronic medical records or EMR and electronic health record or EHR) are used in medical institutions (general hospitals and clinics) to improve work efficiency and facilitate communication among medical professionals. It consists of core systems such as electronic medical records and medical billing, and departmental systems such as picture archiving and communication system (PACS), radiology information system (RIS), clinical testing system, etc., which are indispensable tools for digitization and bring about dramatic innovations in medical care.
The lifting of the ban on external storage of medical records in 2010 has allowed private companies to store medical information in data centers, etc. This has created the market for cloud-based electronic medical records and PACS, which have been widely adopted.

Along with increased penetration rates for many systems, the medical information systems market is now seeing more replacements than new implementations. Through FY2019, prior to Covid, the overall market was growing at a pace of 2% year-on-year. The market declined by 3.2% YoY in FY2020 due to delayed implementations in the midst of the pandemic but has shown a recovery trend after FY2021. The market size for FY2023 is projected to reach 297,359 million yen (up 3.2% YoY), exceeding the market size for FY2019.

Noteworthy Topics

Stable Increase in Cloud-Based EMR Implementations

The main targets of cloud-based EMRs are general medical clinics and medium to small hospitals (with less than 300 beds). Cloud-based EMRs are helping to spread electronic health records to medical institutions that are not necessarily wealthy.

Cloud-based EMRs are spreading rapidly, especially among newly opened general practices. The survey of 210 general clinics that opened in 2022 and 2023* found that 70.8% of newly opened practices were using cloud-based EMRs when they opened. Cloud-based EMR use is also increasing among existing clinics.
Among general hospitals, medium and small hospitals with less than 300 beds show high demand for EMRs despite their difficult business conditions in terms of retaining good physicians and nurses. As cloud-based EMRs can reduce the initial cost and manpower burden, their adoption is increasing in the above-mentioned medical institutions are rising. In addition, the market launch of cloud-based EMRs for large hospitals and the adoption of cloud-based EMRs in university hospitals are being observed.
The market size of EMRs for medium to small general hospitals was estimated at 65,249 million yen in FY2023 and is expected to grow to 70,637 million yen by FY2026. At the same time, cloud-based EMRs are expected to increase, accounting for 12.0% (7,799 million yen) of the total EMR market in FY2023 and 16.8% (11,837 million yen) in FY2026.

* “Corporate Questionnaire to Newly Started Clinics in Japan: Key Research Findings 2024” released on 11 Oct. 2024
https://www.yanoresearch.com/en/press-release/show/press_id/3601

Future Outlook

For many of the core systems and departmental systems in medical information systems, replacement demand is higher than that for new implementations. The medical information systems market is forecast to rise by 1.0% year on year to 300,236 million yen, and to maintain a growth rate of less than 1.0% thereafter.
The reasons for the low growth rate are the increased implementations of EMRs for general hospitals that have driven the market growth in recent years, which has reduced the number of new implementation projects along with smaller implementations taking place simultaneously.  

As noted above, among medical information systems, the adoption of cloud-based EMRs is accelerating. Cloud-based EMRs are expected to account for 16.8% of the total EMR market in FY2026. The increasing percentage of cloud-based EMR implementations and higher EMR adoption rate are likely to reduce the number of medical institutions operating on-premises EMRs around FY2026.
In recent years, peripheral services for EMRs have been on the rise, such as the service to increase the efficiency of medical record entry and to prevent errors (voice entry, automatic transmission from vital signs meters, etc.,) and sentence generation support using generative AI. With the proliferation of EMRs, these peripheral services are also gaining ground, which is expected to help improve productivity and error prevention in hospital operations.
Cloud-based EMRs, which have worked in EMR penetration are now expected to contribute to seamless alignment with the above peripheral services. Meanwhile, some services to securely connect to cloud services are observed for on-premises EMRs for general hospitals, which is expected to make EMR peripheral services available in medical institutions using on-premises EMRs.  

Research Outline