Practice Fusion brings free, on demand service to physicians

San Francisco-based startup Practice Fusion is hoping to do for medical practice management and electronic health records (EHR) what did for CRM.

San Francisco-based startup Practice Fusion is hoping to do for medical practice management and electronic health records (EHR) what did for CRM. Practice Fusion is on demand suite of physician applications that includes practice management (including claims and billing), electronic medical records, scheduling and a patient portal.

It differs from the typical subscription-based sofware-as-a-service (SaaS) business application model in that Practice Fusion is ad supported and free to physicians. "This marks the first time an on-demand application will be completely subsidized through advertising," said Practice Fusion CEO Ryan Howard.

Practice Fusion's ad-supported model will be attractive to both physicians, who like the idea of free services that can streamline their businesses, and advertisers--pharmaceutical companies, clinical researchers, insurance companies and other participants in the healthcare ecosystem--who place a premium on getting access to  physicians.

"Doctors are in the chart and practice management all day, so you have a captive audience," Howard said. "For example, with sending any personal information, a pharmaceutical company can present targeted anti-inflammatory research at the point of care. You can also guarantee no click fraud because only physicians are on the system."

Ryan Howard
Google will provide the targeted ads, and collect the more than half the revenue, based on keywords related to conditions, diagnoses and treatments, Howard said.

Howard said that Practice Fusion has unique intellectual property around presenting related content in HIPPA compliant, anonymous way. "Google will  not be able to access or connect the information to any patient records," Howard noted. He told me that Practice Fusion is compliant with federal privacy laws; anytime information is accessed by company employees or shared with a third party, the data is completely de-identified in accordance with 45 CFR 164.502(d) of the HIPAA mandate.

Regarding the issue of using patient information for profit without patient their permission, Howard said, "At the end of day the solution helps physicians and patients. The product saves lives by making critical healthcare data available during emergencies. An estimated 95,000 deaths per year are attributed to medical errors. With a synchronized, centralized database of information, we can overcome that problem." In addition, with a large, de-identified database of information, Practice Fusion could provide useful demographic and healthcare trend data.

The secondary use of health-related information, for analysis, research, public health, payment, marketing and other activities, will continue to be a subject of debate, as indicated in the September 2006 report from the American Medical Informatics Association, “Toward a National Framework for the Secondary Use of Health Data.”

For physicians who don't want to participate in the ad-supported service, Practice Fusion has a $250 per seat per month option.

Practice Fusion has a significant market opportunity among the smaller medical practices. Digitizing the nation's medical records has become a cornerstone of healthcare reform. The Bush administration has set 2014 as a target date for getting health records online, although the states currently trump federal standards.

Currently, only about 15 percent of physicians in the U.S. have made the leap. There are about 880,000 physicians nationwide, Howard said, and two-thirds are in practices of eight or fewer doctors.

Much larger competitors, such as Cerner, Epic Systems and IDX, have practice management and EHR solutions, but they can cost tens of thousands of dollars per seat and are based on older technologies. "The Epic solution is written in MUMPS--it's not SOA and is decades behind in its technology and charges about 100,000 per seat in every deal we have seen," Howard said. Practice Fusion uses a Microsoft SQL Server back end, XML Web services and a Adobe Flex front end for its client interface. Howard said the company had filed for a patent on on unified patient records across a Web service architecture.

Howard is banking on the nationally mandated move to EHR and Practice Fusion's on demand solution that takes the cost and complexity out of deploying solutions in smaller-sized physician offices will drive rapid growth. "Even if the software is free, if there are any bumps in road to get a customer up and running, such as installing Adober reader or the [Microsoft] .Net framework, it will cause us to fail," Howard said, citing Practice Fusion's zero-overhead deployment, ease of use, cost and aggregated view of data as barriers against that failure.

So far, Practice Fusion has signed up more than 600 small physician practices for its billing and claims management services. The EHR system is being rolled out now, Howard said. just had its eight anniversary and has nearly 650,000 subscribers across 14 languages. That's a good 2014 target for Practice Fusion, but the company won't be alone for long in applying the now popular SaaS principles to the very needy healthcare sector.