Practice Fusion Update: “Free” EHRs and “Cloud Computing” Are for Real

What is reasonable is real, that which is real is reasonable.

Georg Wilhelm Hegel (1770-1831), Philosophy of Right (1821)

December 5, 2011 - Twenty months ago, May 23, 2010 to be precise, I wrote a blog “Is Practice Fusion's ‘Free’ EHR for Real?” In the blog, I described the economic model of Practice Fusion, a San Francisco-based startup.

From the physician’s point of view, Practice Fusion’s model was reasonable, it had advertisers instead of physicians pay for the EHR, no installation of hardware was required at the practice site, physicians could use their own computers for data entry, physicians did not need to learn the ins and outs of software, and computing was conducted offsite in “the cloud,” i.e., offsite,by Internet browsers.

In the words of Practice Fusion’s CEO, Ryan Howard,

“The product is provided to physicians fully subsidized. It’s not a “take now, pay later” or get half of the product now and then pays for the rest of it. Every feature that’s included with the product in any capacity is offered at no cost, so it’s truly free. It’s offered with support, training, and hosting. It’s the only totally free model on the market.”

The beauty of it was that you could use your own computer and somebody else – people and businesses who wanted access to physicians to sell them products – paid the freight for the EHR. In other words, someone else, not physicians, was paying the bill, thus removing expense, one of the major obstacles to EHR adoption.

I was skeptical of Practice Fusion's approach, but open to persuasion. At the time, Practice Fusion was fairly far down the line of EHR vendors physicians used.

Vendor Physician Users Practices Used in 2010

Epic 45,000
AllScripts 40,000
eClinicalWorks 40,000
GE Centricity 35,000
NextGen 35,000
SOAPWare 30,000
Practice Fusion 18,500
Eclipsys 11,000
Sage Health 10,000 .
Greenway Medical 6,000

I do not know where Practice Fusion ranks now, but it has moved up. It now has 130,000 physician-users, serves 25 million patients, and has 130 employees. It has experienced a 7-fold increase in business.

Practice Fusion has venture capital money, which always helps with a rapidly growing company. Its venture capital investors - Felicis Ventures, Glynn Capital Management, Founders Funds, Western Technologies, Artis Capital Management, Morganthal Ventures, and angel investor, Scott Banister, have invested more than $36 million in Practice Fusion.

Why do these investors have such faith in Practice Fusion?

I suspect there are four main reasons.

• The future belongs to high-speed, wired Internet in physicians’ offices. You can no longer practice without the Internet. More than 90% of physician practice have high speed access, and they are adopting smart phone and other mobile apps at breakneck speeds. Moreover, young physicians come from a generation accustomed to video games and IT applications, and they are reluctant to join any practice that does not have an EHR.

• “Cloud computing,” defined as delivering computing as a service rather than a product ,whereby shared resources, software, and hardware are provided over a network (like the electricity grid), is catching on fast. Physicians are not necessarily interested in mastering nuances of software and hardware or in installing and being trained in their use. They just want to “plug in” into a system, get results, do business, grow, and prosper.

• The U.S. government is putting up $90 million, at $44,000 per physician, in the form of financial incentives if doctors use EHRs that met “meaningful use criteria.” Practice Fusion has developed a systematic approach, which consists of a lot of hand-holding and support, to help doctors qualify for meaningful use bonuses.

• EHRs, through a combination of vendor companies like Practice Fusion offering “free” or “low-cost” services and modifications of existing EHRs using more sophisticated voice recognition and patient entry software are making EHRs more user-friendly and useful to use. Furthermore, a whole new IT industry sub-sector has sprung up – companies training and introducing “scribes” into physician practices. These scribes, often aspiring young people interested in a medical career, enter the patient’s data and history and record the physicians findings, in the process humanizing EHRs and making them more practical to use.

Tweet: EHR vendors, like Practice Fusion, are growing fast by offering “free,” low-cost, government subsidized wireless Internet services.