Phil Talbert took the plunge and bought an electronic medical record system for his small medical practice in Shelby, N.C., in 2010, assuming the pricey computer program would last years, perhaps a career.

Then a month ago, just as Talbert was getting comfortable using the system and appreciating its potential, the physician's assistant got a jolt: The service, called MyWay, was being discontinued. The technology, which doesn't work on smartphones and tablets, is already obsolete.

MyWay, in use by more than 4,000 doctors nationwide, had cost up to $30,000 per doctor to install, or about $600 a month per physician as a subscription service.

"We bought what we bought thinking it was a stable company and it was their newest package," Talbert said. "You spend all this time transitioning to a program, and they come back and say, 'Sorry, guys, we're not going to do this after Jan. 1.' ''

The scenario is playing out throughout the nation at a critical time when electronic medical records are no longer optional for doctors and their patients.

The service cancellation by Chicago-based Allscripts is believed to be the first instance of a major vendor of electronic medical records pulling the plug on a system.

In an industry crowded with hundreds of such vendors offering more than 1,000 electronic medical records programs, Talbert's situation is expected to repeat itself across the country as bigger companies gobble up smaller ones and software programs become redundant and obsolete.

The major driver for a wholesale changeover to a new generation of electronic medical records is the Obama administration. As part of the president's move to cut health care costs and improve medical service, the federal government is offering as much as $22.5 billion in incentives for adopting computerized patient records -- up to $63,750 per doctor -- and also planning to ding doctors who don't use electronic systems for their Medicare patients with penalties up to 5 percent. Additionally, hospitals could receive several million dollars a year for meeting federal Medicare performance targets, and face penalties for noncompliance.

Sprawling corporate health systems that make the switch will spend hundreds of millions of dollars in the next several years replacing electronic medical networks at doctors' offices and training several thousand physicians and nurses on new systems. But most doctors, those not affiliated with giant health networks, will be shopping on their own for electronic systems. They will bill fewer patients and work longer hours for several months until they attain competence. Some will be replacing paper records stored in file folders.

The shift, however, is inevitable and embraced by a growing cadre of doctors, who swear by the technology and say patients receive better care from programs that flag dangerous drug interactions, send prompts and reminders, sort patient data and plot charts into meaningful patterns.

"It's in your face for safety," said Charles Cooperberg of Durham, N.C., whose 12-person practice netted $18,000 per doctor in federal incentives in 2011.