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Free EHR Helps Practice Fusion Grow

Practice Fusion CEO Ryan Howard wants doctors to know they don't have to pay for the privilege of adopting electronic health records.

One of his saviors was an investment club called Band of Angels, which appointed retired cardiologist Wally Buch to take the lead on deciding whether Practice Fusion was worth helping. Buch liked the product -- and Howard's scrappy attitude. "I was taken by his tenacious nature first," Buch said in an interview. "I'm a people person, in terms of investing, and I was very impressed by him." After also meeting with the software engineering team, he said, "I had a sense that these people were going to be successful, no matter what happened."

Buch sensed a market opening, since no EHR product seemed to be "particularly well loved," he said. The browser-based software model was the right choice for doctors, particularly in small practices, who had no interest in paying for the servers, software, consultants, maintenance, and backups required for an on-premises deployment, he said.

A key opportunity came from President Obama crafting a stimulus plan that led to the HITECH Act, setting up incentive payments to doctors and hospitals who achieved "meaningful use" of EHR software. Buch figured that if the software worked well, was free, and could promise doctors an easy way to secure their share of the stimulus money, there had to be a way to make a business of it. "He saw the curve a year or two in advance," Howard said.

Once the stimulus money started flowing, and Practice Fusion's membership base began to balloon, other investors loosened their purse strings. Peter Theil personally put in $1 million after a lunch with Howard, and later his Founders Fund added $23 million. Other investments followed, most recently in a $70 million series D funding that brought total capital raised to $134 million and got Howard talking about an IPO in the not-too-distant future.

In a recent interview with The Atlantic's James Fallows, famed venture capitalist John Doerr of Kleiner Perkins Caufield & Byers pointed to Practice Fusion as a prime example of his firm's investment in digital health, which he identified one of two key emerging technologies for the next decade, along with advanced battery tech.

The changes occurring in healthcare today are generally positive, "but it's happening in an incredibly complex market," Howard said. In one visit, a patient might interact with several members of a practice, have a prescription written and routed to a pharmacy, and have lab work ordered, plus a referral to an imaging center and to another specialist physician. "You can't deliver any value unless you can bring the entire ecosystem into the transaction," he said.

Many people need to collaborate on any given patient visit to achieve a favorable result, but a lot of those interactions are still relatively low tech. "We're still seeing 19 billion faxes per year in healthcare. This is one of the biggest challenges we have as an industrialized nation. We won't realize our real potential for the next five to 10 years until that starts to change."

More aggressive Meaningful Use Stage 2 goals are pushing more doctors to engage patients in EHRs. (Source: Flickr user jfcherry)
More aggressive Meaningful Use Stage 2 goals are pushing more doctors to engage patients in EHRs. (Source: Flickr user jfcherry)

The real challenge with meeting some of the more aggressive Meaningful Use Stage 2 goals for patient engagement will have less to do with software design than patient engagement, Howard said. For example, one Stage 2 goal is to get more than 5% of patients to access their own health data through an online portal by viewing it, downloading it, or transmitting it to a third party. Delivering software that makes this possible is one thing; getting patients to actually do it is another.

Patients don't care about their health data unless they think they're dying, Howard said. "Then they care about it a lot." In other words, unless a practice caters to terminally ill patients, meeting the government's patient engagement goal may be difficult. "It's not going to work for everyone," he predicted.

Just getting patients to register on the website so they can see routine lab results can be a challenge, Howard said. "A medical record is like a tax return from a use case perspective -- you keep it in case you get audited, but if you're not getting audited you're never going to open that again. The solution is not simply for the online system to say, 'Here's your data.' It's a matter of how do you market to the patient?" he said. The strategy is going to have to be a lot more proactive than just pointing patients to a website and hoping for the best.

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David F. Carr
David F. Carr,
User Rank: Author
11/15/2013 | 12:08:00 PM
Is this too much like GMail for medical records?
The obvious question here is whether this is too much of a consumer model for a task like managing medical records.
IW Pick
User Rank: Apprentice
11/16/2013 | 1:10:22 AM
All Hype, No Substance
This article fails to mention the significant concerns that exist about Practice Fusion (PF):

1.      PF has gone through close to $90million and has yet to make a profit.  Some may point to the fact that Amazon and Facebook do not or did not initially display large profits.  However, there is one key difference, the other two companies have huge market share. 


2.      Speaking of market share, PF has about 2% of US physicians using their software, or about 16K doctors (Medscape 2012 EHR Slide Show).  $90million and only 2% market share!  PF just obtained an additional $60million in funding and the CEO wants to "double its users".  So then PF will spend close to $150million to get 4% market share?  These are not very good numbers.  PF likes to obscure the facts about its user base by stating terms like "100,000 healthcare workers".  Remember, doctors represent only 16K of this number.  The rest are nurses, medical assistants, billers, receptionists, etc.  I strongly suspect the reason PF needed the additional $60million is because the company is burning through cash at a crazy pace. 


3.      PF has no billing component.  Ask any physician who has had separate EMR and billing systems and they will tell you that getting the two interfaced is torture.  It is not unheard of for physicians to lose several months revenue due to lack of connectivity.   Again $90million spent and no billing component. 


4.      PF recently came under harsh criticism from physicians and patients for not being clear on its posting of reviews by patients of doctors.  PF sent out emails to patients that appeared to have originated by the physician.  The patients then replied, often giving personal medical information as well as demographic data.  The patient responses were then posted in a public forum. Examples of disaster postings include patients who wrote about genital itching and those who received emails at work addressed from psychiatrists.


When doctors complained, PF deleted negative physician comments from its on line physician discussion forums.  There stands a good chance the Department of Health and Human Services will begin an investigation for a massive HIPAA violation.   


5.      Here is the most troubling fact of all: PF has a lousy EMR.  I am a physician and registered for their product.  I never made it past the demo.  I found the software to be clunky and not at all user friendly. 


Overall, I am not at all optimistic that this company can remain viable.  
User Rank: Apprentice
1/1/2014 | 6:06:30 AM
Oh My God Have you seen this?
David F. Carr
David F. Carr,
User Rank: Author
1/2/2014 | 12:34:05 PM
Re: Oh My God Have you seen this?
pretty careless screwup
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